30 Valentine's Day Gift Fails

When good intentions go horribly wrong.

Novelty Toilet Paper.

You can get your hands on a variety of different prints.

Source: barefootfloor.com

Any clothing that resembles this.

Online sales are coming soon, thank goodness.

Source: retailhellunderground.com

Your face molded in chocolate.

FabCafe in Tokyo, Japan offers these custom chocolates using a 2D to 3D scanner.

Source: solidsmack.com

A Pizza Hut proposal.

Source: thedailywhat

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Using Equities to Trade FX

Did you know that equity markets can also be used to help gauge currency movement? In a way, you can use the equity indices as some kind of a forex crystal ball.

Based on what you see on the television, what you hear on the radio, and what you read in the newspaper, it seems that the stock (equity) market is the most closely covered financial market. It's definitely exciting to trade since you can buy the companies that make the products you can't live without.



One thing to remember is that in order to purchase stocks from a particular country, you must first have the local currency.

To invest in stocks in the Japan, a European investor must first exchange his euros (EUR) into Japanese yen (JPY). This increased demand for JPY causes the value of the JPY to appreciate. On the other hand, selling euros increases its supply, which drives the euro's value lower.

When the outlook for a certain stock market is looking good, international money flows in. On the other hand, when the stock market is struggling, international investors take their money out and look for a better place to park their funds.

Even though you may not trade stocks, as a forex trader, you should still pay attention to the stock markets in major countries.

If the stock market in one country starts performing better than the stock market in another country, you should be aware that money will probably be moving from the country with the weaker stock market to the country with the stronger stock market.

This could lead to a rise in value of the currency for the country with the stronger stock market, while the value of the currency could depreciate for the country with the weaker stock market. The general idea is: strong stock market, strong currency; weak stock market, weak currency.

If you bought the currency from the country with the stronger stock market and sold the currency from the country with the weaker stock market, you can potentially make some nice dough.

Balance of trade

The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.[1][dead link] A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance.
Early understanding of the functioning of balance of trade informed the economic policies of Early Modern Europe that are grouped under the heading mercantilism. An early statement appeared in Discourse of the Common Weal of this Realm of England, 1549: "We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them."[2] Similarly a systematic and coherent explanation of balance of trade was made public through Thomas Mun's c1630 "England's treasure by forraign trade, or, The balance of our forraign trade is the rule of our treasure"[3]
Contents [hide]
1 Definition
2 Views on economic impact
2.1 Conditions where trade imbalances may be problematic
2.2 Conditions where trade imbalances may not be problematic
2.3 Adam Smith on trade deficits
2.4 Frédéric Bastiat on the fallacy of trade deficits
2.5 John Maynard Keynes on the balance of trade
2.6 Milton Friedman on trade deficits
2.7 Warren Buffett on trade deficits
3 Physical balance of trade
4 United States Trade Deficit
5 See also
6 Notes
7 External links
[edit]Definition



The balance of trade encompasses the activity of exports and imports, like the work of this cargo ship going through the Panama Canal.
The balance of trade forms part of the current account, which includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.
The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stock, nor does it factor in the concept of importing goods to produce for the domestic market).
Measuring the balance of trade can be problematic because of problems with recording and collecting data. As an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by almost 1%; it appears the world is running a positive balance of trade with itself. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. However, especially for developed countries, accuracy is likely.
Factors that can affect the balance of trade include:
The cost of production (land, labor, capital, taxes, incentives, etc.) in the exporting economy vis-à-vis those in the importing economy;
The cost and availability of raw materials, intermediate goods and other inputs;
Exchange rate movements;
Multilateral, bilateral and unilateral taxes or restrictions on trade;
Non-tariff barriers such as environmental, health or safety standards;
The availability of adequate foreign exchange with which to pay for imports; and
Prices of goods manufactured at home (influenced by the responsiveness of supply)
In addition, the trade balance is likely to differ across the business cycle. In export-led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion. However, with domestic demand led growth (as in the United States and Australia) the trade balance will worsen at the same stage in the business cycle.
Since the mid 1980s, the United States has had a growing deficit in tradeable goods, especially with Asian nations (China and Japan) which now hold large sums of U.S debt that has funded the consumption.[4][5] The U.S. has a trade surplus with nations such as Australia. The issue of trade deficits can be complex. Trade deficits generated in tradeable goods such as manufactured goods or software may impact domestic employment to different degrees than trade deficits in raw materials.
Economies such as Canada, Japan, and Germany which have savings surpluses, typically run trade surpluses. China, a high growth economy, has tended to run trade surpluses. A higher savings rate generally corresponds to a trade surplus. Correspondingly, the U.S. with its lower savings rate has tended to run high trade deficits, especially with Asian nations.
[edit]Views on economic impact

[edit]Conditions where trade imbalances may be problematic
Those who ignore the effects of long run trade deficits may be confusing David Ricardo's principle of comparative advantage with Adam Smith's principle of absolute advantage, specifically ignoring the latter. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production are internationally mobile.[6][7] Global labor arbitrage, a phenomenon described by economist Stephen S. Roach, where one country exploits the cheap labor of another, would be a case of absolute advantage that is not mutually beneficial.[8][9][10] Since the stagflation of the 1970s, the U.S. economy has been characterized by slower GDP growth. In 1985, the U.S. began its growing trade deficit with China. Over the long run, nations with trade surpluses tend also to have a savings surplus. The U.S. generally has lower savings rates than its trading partners, which tend to have trade surpluses. Germany, France, Japan, and Canada have maintained higher savings rates than the U.S. over the long run.[11]
Few economists believe that GDP and employment can be dragged down by an over-large deficit over the long run.[12][13] Others believe that trade deficits are good for the economy.[14] The opportunity cost of a forgone tax base may outweigh perceived gains, especially where artificial currency pegs and manipulations are present to distort trade.[15]
Wealth-producing primary sector jobs in the U.S. such as those in manufacturing and computer software have often been replaced by much lower paying wealth-consuming jobs such those in retail and government in the service sector when the economy recovered from recessions.[7][16][17] Some economists contend that the U.S. is borrowing to fund consumption of imports while accumulating unsustainable amounts of debt.[4][18]
In 2006, the primary economic concerns focused on: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),[4] high trade deficits, and a rise in illegal immigration.[18][19]
These issues have raised concerns among economists and unfunded liabilities were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.[19][20] On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the U.S. to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.[21]
See also: Friedrich List
[edit]Conditions where trade imbalances may not be problematic
Small trade deficits are generally not considered to be harmful to either the importing or exporting economy. However, when a national trade imbalance expands beyond prudence (generally thought to be several[clarification needed] percent of GDP, for several years), adjustments tend to occur. While unsustainable imbalances [22] may persist for long periods (cf, Singapore and New Zealand’s surpluses and deficits, respectively), the distortions likely to be caused by large flows of wealth out of one economy and into another tend to become intolerable.[citation needed]
In simple terms, trade deficits are paid for out of foreign exchange reserves, and may continue until such reserves are depleted. At such a point, the importer can no longer continue to purchase more than is sold abroad. This is likely to have exchange rate implications: a sharp loss of value in the deficit economy’s exchange rate with the surplus economy’s currency will change the relative price of tradable goods, and facilitate a return to balance or (more likely) an over-shooting into surplus the other direction.
More complexly, an economy may be unable to export enough goods to pay for its imports, but is able to find funds elsewhere. Service exports, for example, are more than sufficient to pay for Hong Kong’s domestic goods export shortfall. In poorer countries, foreign aid may fill the gap while in rapidly developing economies a capital account surplus often off-sets a current-account deficit. Finally, there are some economies where transfers from nationals working abroad contribute significantly to paying for imports. The Philippines, Bangladesh and Mexico are examples of transfer-rich economies.
[edit]Adam Smith on trade deficits
"In the foregoing part of this chapter I have endeavoured to show, even upon the principles of the commercial system, how unnecessary it is to lay extraordinary restraints upon the importation of goods from those countries with which the balance of trade is supposed to be disadvantageous. Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded. When two places trade with one another, this [absurd] doctrine supposes that, if the balance be even, neither of them either loses or gains; but if it leans in any degree to one side, that one of them loses and the other gains in proportion to its declension from the exact equilibrium." (Smith, 1776, book IV, ch. iii, part ii) [23]
[edit]Frédéric Bastiat on the fallacy of trade deficits
The 19th century economist and philosopher Frédéric Bastiat expressed the idea that trade deficits actually were a manifestation of profit, rather than a loss. He proposed as an example to suppose that he, a Frenchman, exported French wine and imported British coal, turning a profit. He supposed he was in France, and sent a cask of wine which was worth 50 francs to England. The customhouse would record an export of 50 francs. If, in England, the wine sold for 70 francs (or the pound equivalent), which he then used to buy coal, which he imported into France, and was found to be worth 90 francs in France, he would have made a profit of 40 francs. But the customhouse would say that the value of imports exceeded that of exports and was trade deficit against the ledger of France.[24]
Note that Bastiat only comes to this conclusion thanks to the customhouse's accounting error. The customhouse is valuing imports and exports based on the good's value in their home country, not the price paid when the actual international trade occurs as is conventionally done when calculating the trade balance. Correcting for the accounting error a neutral conclusion is reached: France sells wine for 70 and buys coal for 70, and Bastiat's profit does not come from England but simply from trading goods within France.
By reductio ad absurdum, Bastiat argued that the national trade deficit was an indicator of a successful economy, rather than a failing one. Bastiat predicted that a successful, growing economy would result in greater trade deficits, and an unsuccessful, shrinking economy would result in lower trade deficits. This was later, in the 20th century, affirmed by economist Milton Friedman.
[edit]John Maynard Keynes on the balance of trade
In the last few years of his life, John Maynard Keynes was much preoccupied with the question of balance in international trade. He was the leader of the British delegation to the United Nations Monetary and Financial Conference in 1944 that established the Bretton Woods system of international currency management.
He was the principal author of a proposal — the so-called Keynes Plan —— for an International Clearing Union. The two governing principles of the plan were that the problem of settling outstanding balances should be solved by 'creating' additional 'international money', and that debtor and creditor should be treated almost alike as disturbers of equilibrium. In the event, though, the plans were rejected, in part because "American opinion was naturally reluctant to accept the principle of equality of treatment so novel in debtor-creditor relationships".[25]
His view, supported by many economists and commentators at the time, was that creditor nations may be just as responsible as debtor nations for disequilibrium in exchanges and that both should be under an obligation to bring trade back into a state of balance. Failure for them to do so could have serious consequences. In the words of Geoffrey Crowther, then editor of The Economist, "If the economic relationships between nations are not, by one means or another, brought fairly close to balance, then there is no set of financial arrangements that can rescue the world from the impoverishing results of chaos."[26]
These ideas were informed by events prior to the Great Depression when — in the opinion of Keynes and others — international lending, primarily by the U.S., exceeded the capacity of sound investment and so got diverted into non-productive and speculative uses, which in turn invited default and a sudden stop to the process of lending.[27]
Influenced by Keynes, economics texts in the immediate post-war period put a significant emphasis on balance in trade. For example, the second edition of the popular introductory textbook, An Outline of Money,[28] devoted the last three of its ten chapters to questions of foreign exchange management and in particular the 'problem of balance'. However, in more recent years, since the end of the Bretton Woods system in 1971, with the increasing influence of Monetarist schools of thought in the 1980s, and particularly in the face of large sustained trade imbalances, these concerns — and particularly concerns about the destabilising effects of large trade surpluses — have largely disappeared from mainstream economics discourse[29] and Keynes' insights have slipped from view.[30] They are receiving some attention again in the wake of the Financial crisis of 2007–2010.[31]
[edit]Milton Friedman on trade deficits
In the 1980s, Milton Friedman, the Nobel Prize-winning economist and father of Monetarism, contended that some of the concerns of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to exporting industries.
Prof. Friedman argued that trade deficits are not necessarily important as high exports raise the value of the currency, reducing aforementioned exports, and vice versa for imports, thus naturally removing trade deficits not due to investment. Since 1971, when the Nixon administration decided to abolish fixed exchange rates, America's Current Account accumulated trade deficits have totaled $7.75 Trillion as of 2010. This deficit exists as it is matched by investment coming in to the United States- purely by the definition of the balance of payments, any current account deficit that exists is matched by an inflow of foreign investment.
Milton Friedman's son, David D. Friedman, shares his father's view and cites the comparative advantage concepts of David Ricardo.[32]
In the late 1970s and early 1980s, the U.S. had experienced high inflation and Friedman's policy positions tended to defend the stronger dollar at that time. He stated his belief that these trade deficits were not necessarily harmful to the economy at the time since the currency comes back to the country (country A sells to country B, country B sells to country C who buys from country A, but the trade deficit only includes A and B). However, it may be in one form or another including the possible tradeoff of foreign control of assets. In his view, the "worst case scenario" of the currency never returning to the country of origin was actually the best possible outcome: the country actually purchased its goods by exchanging them for pieces of cheaply-made paper. As Friedman put it, this would be the same result as if the exporting country burned the dollars it earned, never returning it to market circulation.[33] This position is a more refined version of the theorem first discovered by David Hume.[34] Hume argued that England could not permanently gain from exports, because hoarding gold (i.e., currency) would make gold more plentiful in England; therefore, the prices of English goods would rise, making them less attractive exports and making foreign goods more attractive imports. In this way, countries' trade balances would balance out.[35]
Friedman believed that deficits would be corrected by free markets as floating currency rates rise or fall with time to encourage or discourage imports in favor of the exports, reversing again in favor of imports as the currency gains strength. In the real world, a potential difficulty is that currency markets are far from a free market, with government and central banks being major players, and this is unlikely to change within the foreseeable future. Nevertheless, recent developments have shown that the global economy is undergoing a fundamental shift. For many years, the U.S. has borrowed and bought while in general, the rest of the world has lent and sold. However, as Friedman predicted, this paradigm appears to be changing.
As of October 2007, the U.S. dollar weakened against the euro, British pound, and many other currencies. For instance, the euro hit $1.42 in October 2007,[36] the strongest it has been since its birth in 1999. Against this backdrop, American exporters are finding quite favorable overseas markets for their products and U.S. consumers are responding to their general housing slowdown by slowing their spending. Furthermore, China, the Middle East, central Europe and Africa are absorbing more of the world's imports which in the end may result in a world economy that is more evenly balanced. All of this could well add up to a major readjustment of the U.S. trade deficit, which as a percentage of GDP, began in 1991.[37]
Friedman contended that the structure of the balance of payments was misleading. In an interview with Charlie Rose, he stated that "on the books" the US is a net borrower of funds, using those funds to pay for goods and services. He essentially claimed that the foreign assets were not carried on the books at their higher, truer value.[citation needed]
Friedman presented his analysis of the balance of trade in Free to Choose, widely considered his most significant popular work.
[edit]Warren Buffett on trade deficits
The successful American businessman and investor Warren Buffett was quoted in the Associated Press (January 20, 2006) as saying "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil... Right now, the rest of the world owns $3 trillion more of us than we own of them." Buffett has proposed a tool called Import Certificates as a solution to the United States' problem and ensure balanced trade.[38]
[edit]Physical balance of trade

Monetary balance of trade is different from physical balance of trade[39] (which is expressed in amount of raw materials, known also as Total Material Consumption). Developed countries usually import a lot of primary raw materials from developing countries at low prices. Often, these materials are then converted into finished products, and a significant amount of value is added. Although for instance the EU (as well as many other developed countries) has a balanced monetary balance of trade, its physical trade balance (especially with developing countries) is negative, meaning that a lot less material is exported than imported. For this reason, activists talk about the issue of ecological debt which implies a sort of predatory economic system. The nature of the trade balance statistics is such that it conceals distorted material flow.
[edit]United States Trade Deficit



United States balance of trade (1980–2010), with negative numbers denoting a trade deficit
The U.S. has held a trade deficit starting late in the 1960s. Its trade deficit has been increasing at a large rate since 1997 [40] (See chart) and increased by 49.8 billion dollars between 2005 and 2006, setting a record high of 817.3 billion dollars, up from 767.5 billion dollars the previous year.[41]
The graph indicates that, as Frédéric Bastiat predicted, the deficit slackened during recessions and grew during periods of expansion. Also of note, many economists calculate trade deficits and/or current account deficits as a percentage of GDP. The US last had a trade surplus in 1975.[42] Every year there has been a major reduction in economic growth, it is followed by a reduction in the US trade deficit.[37]
[edit]See also

The foreign exchange market (forex, FX, or currency market)

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The foreign exchange market (forex, FX, or currency market) is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies.[1]
The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business' income is in US dollars. It also supports direct speculation in the value of currencies, and the carry trade, speculation on the change in interest rates in two currencies.[2]
In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s after three decades of government restrictions on foreign exchange transactions (the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states after World War II), when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of
its huge trading volume representing the largest asset class in the world leading to high liquidity;
its geographical dispersion;
its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
the variety of factors that affect exchange rates;
the low margins of relative profit compared with other markets of fixed income; and
the use of leverage to enhance profit and loss margins and with respect to account size.
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding currency intervention by central banks. According to the Bank for International Settlements,[3] as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms specializing on foreign exchange market had put the average daily turnover in excess of US$4 trillion.[4]
The $3.98 trillion break-down is as follows:
$1.490 trillion in spot transactions
$475 billion in outright forwards
$1.765 trillion in foreign exchange swaps
$43 billion Currency swaps
$207 billion in options and other products
Contents [hide]
1 Market Size and liquidity
2 Market participants
2.1 Banks
2.2 Commercial companies
2.3 Central banks
2.4 Forex fixing
2.5 Hedge funds as speculators
2.6 Investment management firms
2.7 Retail foreign exchange traders
2.8 Non-bank foreign exchange companies
2.9 Money transfer/remittance companies and bureaux de change
3 Trading characteristics
4 Determinants of FX rates
4.1 Economic factors
4.2 Political conditions
4.3 Market psychology
5 Financial instruments
5.1 Spot
5.2 Forward
5.3 Swap
5.4 Future
5.5 Option
6 Speculation
7 Risk aversion in forex
8 Further reading
9 See also
10 Notes
11 References
12 External links
Market Size and liquidity



Main foreign exchange market turnover, 1988–2007, measured in billions of USD.
The foreign exchange market is the most liquid financial market in the world. Traders include large banks, central banks, institutional investors, currency speculators, corporations, governments, other financial institutions, and retail investors. The average daily turnover in the global foreign exchange and related markets is continuously growing. According to the 2010 Triennial Central Bank Survey, coordinated by the Bank for International Settlements, average daily turnover was US$3.98 trillion in April 2010 (vs $1.7 trillion in 1998).[3] Of this $3.98 trillion, $1.5 trillion was spot foreign exchange transactions and $2.5 trillion was traded in outright forwards, FX swaps and other currency derivatives.
Trading in the UK accounted for 36.7% of the total, making UK by far the most important global center for foreign exchange trading. In second and third places, respectively, trading in the USA accounted for 17.9%, and Japan accounted for 6.2%.[5]
Turnover of exchange-traded foreign exchange futures and options have grown rapidly in recent years, reaching $166 billion in April 2010 (double the turnover recorded in April 2007). Exchange-traded currency derivatives represent 4% of OTC foreign exchange turnover. FX futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and are actively traded relative to most other futures contracts.
Most developed countries permit the trading of FX derivative products (like currency futures and options on currency futures) on their exchanges. All these developed countries already have fully convertible capital accounts. A number of emerging countries do not permit FX derivative products on their exchanges in view of controls on the capital accounts. The use of foreign exchange derivatives is growing in many emerging economies.[6] Countries such as Korea, South Africa, and India have established currency futures exchanges, despite having some controls on the capital account.
Top 10 currency traders [7]
% of overall volume, May 2011
Rank Name Market share
1 Deutsche Bank 15.64%
2 Barclays Capital 10.75%
3 UBS AG 10.59%
4 Citi 8.88%
5 JPMorgan 6.43%
6 HSBC 6.26%
7 Royal Bank of Scotland 6.20%
8 Credit Suisse 4.80%
9 Goldman Sachs 4.13%
10 Morgan Stanley 3.64%
Foreign exchange trading increased by 20% between April 2007 and April 2010 and has more than doubled since 2004.[8] The increase in turnover is due to a number of factors: the growing importance of foreign exchange as an asset class, the increased trading activity of high-frequency traders, and the emergence of retail investors as an important market segment. The growth of electronic execution methods and the diverse selection of execution venues have lowered transaction costs, increased market liquidity, and attracted greater participation from many customer types. In particular, electronic trading via online portals has made it easier for retail traders to trade in the foreign exchange market. By 2010, retail trading is estimated to account for up to 10% of spot FX turnover, or $150 billion per day (see retail trading platforms).
Because foreign exchange is an over-the-counter (OTC) market where brokers/dealers negotiate directly with one another, there is no central exchange or clearing house. The biggest geographic trading center is the UK, primarily London, which according to TheCityUK estimates has increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. For instance, when the International Monetary Fund (IMF) calculates the value of its Special Drawing Rights (SDRs) every day, they use the London market prices at noon that day.
Market participants

Financial markets

Public market
Exchange
Securities
Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt
Stock market
Stock
Preferred stock
Common stock
Registered share
Voting share
Stock exchange
Derivatives market
Securitization
Hybrid security
Credit derivative
Futures exchange
OTC, non organized
Spot market
Forwards
Swaps
Options
Foreign exchange
Exchange rate
Currency
Other markets
Money market
Reinsurance market
Commodity market
Real estate market
Practical trading
Participants
Clearing house
Financial regulation
Finance series
Banks and banking
Corporate finance
Personal finance
Public finance
v · d · e
Unlike a stock market, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest commercial banks and securities dealers. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and not known to players outside the inner circle. The difference between the bid and ask prices widens (for example from 0-1 pip to 1-2 pips for a currencies such as the EUR) as you go down the levels of access. This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the "line" (the amount of money with which they are trading). The top-tier interbank market accounts for 53% of all transactions. From there, smaller banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size”.[9] Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. Many large banks may trade billions of dollars, daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, which are trading desks for the bank's own account. Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for large fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most trading rooms, but turnover is noticeably smaller than just a few years ago.[citation needed]
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants.
Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
Forex fixing
Forex fixing is the daily monetary exchange rate fixed by the national bank of each country. The idea is that central banks use the fixing time and exchange rate to evaluate behavior of their currency. Fixing exchange rates reflects the real value of equilibrium in the forex market. Banks, dealers and online foreign exchange traders use fixing rates as a trend indicator.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank.[10] Several scenarios of this nature were seen in the 1992–93 European Exchange Rate Mechanism collapse, and in more recent times in Southeast Asia.
Hedge funds as speculators
About 70% to 90%[citation needed] of the foreign exchange transactions are speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency. Hedge funds have gained a reputation for aggressive currency speculation since 1996. They control billions of dollars of equity and may borrow billions more, and thus may overwhelm intervention by central banks to support almost any currency, if the economic fundamentals are in the hedge funds' favor.
Investment management firms
Investment management firms (who typically manage large accounts on behalf of customers such as pension funds and endowments) use the foreign exchange market to facilitate transactions in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.
Some investment management firms also have more speculative specialist currency overlay operations, which manage clients' currency exposures with the aim of generating profits as well as limiting risk. Whilst the number of this type of specialist firms is quite small, many have a large value of assets under management (AUM), and hence can generate large trades.
Retail foreign exchange traders
Individual Retail speculative traders constitute a growing segment of this market with the advent of retail forex platforms, both in size and importance. Currently, they participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated in the USA by the Commodity Futures Trading Commission and National Futures Association have in the past been subjected to periodic foreign exchange scams.[11][12] To deal with the issue, the NFA and CFTC began (as of 2009) imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller and perhaps questionable brokers are now gone or have moved to countries outside the US. A number of the forex brokers operate from the UK under Financial Services Authority regulations where forex trading using margin is part of the wider over-the-counter derivatives trading industry that includes Contract for differences and financial spread betting.
There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or mark-up in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principal in the transaction versus the retail customer, and quote a price they are willing to deal at.
Non-bank foreign exchange companies
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but rather currency exchange with payments (i.e., there is usually a physical delivery of currency to a bank account).
It is estimated that in the UK, 14% of currency transfers/payments[13] are made via Foreign Exchange Companies.[14] These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
Money transfer/remittance companies and bureaux de change
Money transfer companies/remittance companies perform high-volume low-value transfers generally by economic migrants back to their home country. In 2007, the Aite Group estimated that there were $369 billion of remittances (an increase of 8% on the previous year). The four largest markets (India, China, Mexico and the Philippines) receive $95 billion. The largest and best known provider is Western Union with 345,000 agents globally followed by UAE Exchange[citation needed]
Bureau de change or currency transfer companies provide low value foreign exchange services for travelers. These are typically located at airports and stations or at tourist locations and allow physical notes to be exchanged from one currency to another. They access the foreign exchange markets via banks or non bank foreign exchange companies.
Trading characteristics

Most traded currencies by value
Currency distribution of global foreign exchange market turnover[3]
Rank Currency ISO 4217 code
(Symbol) % daily share
(April 2010)
1
United States dollar
USD ($)
84.9%
2
Euro
EUR (€)
39.1%
3
Japanese yen
JPY (¥)
19.0%
4
Pound sterling
GBP (£)
12.9%
5
Australian dollar
AUD ($)
7.6%
6
Swiss franc
CHF (Fr)
6.4%
7
Canadian dollar
CAD ($)
5.3%
8
Hong Kong dollar
HKD ($)
2.4%
9
Swedish krona
SEK (kr)
2.2%
10
New Zealand dollar
NZD ($)
1.6%
11
South Korean won
KRW (₩)
1.5%
12
Singapore dollar
SGD ($)
1.4%
13
Norwegian krone
NOK (kr)
1.3%
14
Mexican peso
MXN ($)
1.3%
15
Indian rupee
INR ()
0.9%
Other 12.2%
Total[15] 200%
There is no unified or centrally cleared market for the majority of FX trades, and there is very little cross-border regulation. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currencies instruments are traded. This implies that there is not a single exchange rate but rather a number of different rates (prices), depending on what bank or market maker is trading, and where it is. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs instantaneously. Due to London's dominance in the market, a particular currency's quoted price is usually the London market price. A joint venture of the Chicago Mercantile Exchange and Reuters, called Fxmarketspace opened in 2007 and aspired but failed to the role of a central market clearing mechanism.[citation needed]
The main trading center is London, but New York, Tokyo, Hong Kong and Singapore are all important centers as well. Banks throughout the world participate. Currency trading happens continuously throughout the day; as the Asian trading session ends, the European session begins, followed by the North American session and then back to the Asian session, excluding weekends.
Fluctuations in exchange rates are usually caused by actual monetary flows as well as by expectations of changes in monetary flows caused by changes in gross domestic product (GDP) growth, inflation (purchasing power parity theory), interest rates (interest rate parity, Domestic Fisher effect, International Fisher effect), budget and trade deficits or surpluses, large cross-border M&A deals and other macroeconomic conditions. Major news is released publicly, often on scheduled dates, so many people have access to the same news at the same time. However, the large banks have an important advantage; they can see their customers' order flow.
Currencies are traded against one another. Each currency pair thus constitutes an individual trading product and is traditionally noted XXXYYY or XXX/YYY, where XXX and YYY are the ISO 4217 international three-letter code of the currencies involved. The first currency (XXX) is the base currency that is quoted relative to the second currency (YYY), called the counter currency (or quote currency). For instance, the quotation EURUSD (EUR/USD) 1.5465 is the price of the euro expressed in US dollars, meaning 1 euro = 1.5465 dollars. The market convention is to quote most exchange rates against the USD with the US dollar as the base currency (e.g. USDJPY, USDCAD, USDCHF). The exceptions are the British pound (GBP), Australian dollar (AUD), the New Zealand dollar (NZD) and the euro (EUR) where the USD is the counter currency (e.g. GBPUSD, AUDUSD, NZDUSD, EURUSD).
The factors affecting XXX will affect both XXXYYY and XXXZZZ. This causes positive currency correlation between XXXYYY and XXXZZZ.
On the spot market, according to the 2010 Triennial Survey, the most heavily traded bilateral currency pairs were:
EURUSD: 28%
USDJPY: 14%
GBPUSD (also called cable): 9%
and the US currency was involved in 84.9% of transactions, followed by the euro (39.1%), the yen (19.0%), and sterling (12.9%) (see table). Volume percentages for all individual currencies should add up to 200%, as each transaction involves two currencies.
Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate. Until recently, trading the euro versus a non-European currency ZZZ would have usually involved two trades: EURUSD and USDZZZ. The exception to this is EURJPY, which is an established traded currency pair in the interbank spot market. As the dollar's value has eroded during 2008, interest in using the euro as reference currency for prices in commodities (such as oil), as well as a larger component of foreign reserves by banks, has increased dramatically. Transactions in the currencies of commodity-producing countries, such as AUD, NZD, CAD, have also increased.
Determinants of FX rates

See also: exchange rates
The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):
(a) International parity conditions: Relative Purchasing Power Parity, interest rate parity, Domestic Fisher effect, International Fisher effect. Though to some extent the above theories provide logical explanation for the fluctuations in exchange rates, yet these theories falter as they are based on challengeable assumptions [e.g., free flow of goods, services and capital] which seldom hold true in the real world.
(b) Balance of payments model (see exchange rate): This model, however, focuses largely on tradable goods and services, ignoring the increasing role of global capital flows. It failed to provide any explanation for continuous appreciation of dollar during 1980s and most part of 1990s in face of soaring US current account deficit.
(c) Asset market model (see exchange rate): views currencies as an important asset class for constructing investment portfolios. Assets prices are influenced mostly by people's willingness to hold the existing quantities of assets, which in turn depends on their expectations on the future worth of these assets. The asset market model of exchange rate determination states that “the exchange rate between two currencies represents the price that just balances the relative supplies of, and demand for, assets denominated in those currencies.”
None of the models developed so far succeed to explain FX rates levels and volatility in the longer time frames. For shorter time frames (less than a few days) algorithms can be devised to predict prices. It is understood from the above models that many macroeconomic factors affect the exchange rates and in the end currency prices are a result of dual forces of demand and supply. The world's currency markets can be viewed as a huge melting pot: in a large and ever-changing mix of current events, supply and demand factors are constantly shifting, and the price of one currency in relation to another shifts accordingly. No other market encompasses (and distills) as much of what is going on in the world at any given time as foreign exchange.
Supply and demand for any given currency, and thus its value, are not influenced by any single element, but rather by several. These elements generally fall into three categories: economic factors, political conditions and market psychology.
Economic factors
These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.
Economic policy comprises government fiscal policy (budget/spending practices) and monetary policy (the means by which a government's central bank influences the supply and "cost" of money, which is reflected by the level of interest rates).
Government budget deficits or surpluses: The market usually reacts negatively to widening government budget deficits, and positively to narrowing budget deficits. The impact is reflected in the value of a country's currency.
Balance of trade levels and trends: The trade flow between countries illustrates the demand for goods and services, which in turn indicates demand for a country's currency to conduct trade. Surpluses and deficits in trade of goods and services reflect the competitiveness of a nation's economy. For example, trade deficits may have a negative impact on a nation's currency.
Inflation levels and trends: Typically a currency will lose value if there is a high level of inflation in the country or if inflation levels are perceived to be rising. This is because inflation erodes purchasing power, thus demand, for that particular currency. However, a currency may sometimes strengthen when inflation rises because of expectations that the central bank will raise short-term interest rates to combat rising inflation.
Economic growth and health: Reports such as GDP, employment levels, retail sales, capacity utilization and others, detail the levels of a country's economic growth and health. Generally, the more healthy and robust a country's economy, the better its currency will perform, and the more demand for it there will be.
Productivity of an economy: Increasing productivity in an economy should positively influence the value of its currency. Its effects are more prominent if the increase is in the traded sector [1].
Political conditions
Internal, regional, and international political conditions and events can have a profound effect on currency markets.
All exchange rates are susceptible to political instability and anticipations about the new ruling party. Political upheaval and instability can have a negative impact on a nation's economy. For example, destabilization of coalition governments in Pakistan and Thailand can negatively affect the value of their currencies. Similarly, in a country experiencing financial difficulties, the rise of a political faction that is perceived to be fiscally responsible can have the opposite effect. Also, events in one country in a region may spur positive/negative interest in a neighboring country and, in the process, affect its currency.
Market psychology
Market psychology and trader perceptions influence the foreign exchange market in a variety of ways:
Flights to quality: Unsettling international events can lead to a "flight to quality", a type of capital flight whereby investors move their assets to a perceived "safe haven". There will be a greater demand, thus a higher price, for currencies perceived as stronger over their relatively weaker counterparts. The U.S. dollar, Swiss franc and gold have been traditional safe havens during times of political or economic uncertainty.[16]
Long-term trends: Currency markets often move in visible long-term trends. Although currencies do not have an annual growing season like physical commodities, business cycles do make themselves felt. Cycle analysis looks at longer-term price trends that may rise from economic or political trends.[17]
"Buy the rumor, sell the fact": This market truism can apply to many currency situations. It is the tendency for the price of a currency to reflect the impact of a particular action before it occurs and, when the anticipated event comes to pass, react in exactly the opposite direction. This may also be referred to as a market being "oversold" or "overbought".[18] To buy the rumor or sell the fact can also be an example of the cognitive bias known as anchoring, when investors focus too much on the relevance of outside events to currency prices.
Economic numbers: While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect: the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.
Technical trading considerations: As in other markets, the accumulated price movements in a currency pair such as EUR/USD can form apparent patterns that traders may attempt to use. Many traders study price charts in order to identify such patterns.[19]
Financial instruments

Spot
A spot transaction is a two-day delivery transaction (except in the case of trades between the US Dollar, Canadian Dollar, Turkish Lira, EURO and Russian Ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract; and interest is not included in the agreed-upon transaction.
Forward
See also: forward contract
One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be one day, a few days, months or years. Usually the date is decided by both parties. Then the forward contract is negotiated and agreed upon by both parties.
Swap
Main article: foreign exchange swap
The most common type of forward transaction is the FX swap. In an FX swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange.
Future
Main article: currency future
Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.
Option
Main article: foreign exchange option
A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world.
Speculation

Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, economists including Milton Friedman have argued that speculators ultimately are a stabilizing influence on the market and perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do.[20] Other economists such as Joseph Stiglitz consider this argument to be based more on politics and a free market philosophy than on economics.[21]
Large hedge funds and other well capitalized "position traders" are the main professional speculators. According to some economists, individual traders could act as "noise traders" and have a more destabilizing role than larger and better informed actors.[22]
Currency speculation is considered a highly suspect activity in many countries.[where?] While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 500% per annum, and later to devalue the krona.[23] Former Malaysian Prime Minister Mahathir Mohamad is one well known proponent of this view. He blamed the devaluation of the Malaysian ringgit in 1997 on George Soros and other speculators.
Gregory J. Millman reports on an opposing view, comparing speculators to "vigilantes" who simply help "enforce" international agreements and anticipate the effects of basic economic "laws" in order to profit.[24]
In this view, countries may develop unsustainable financial bubbles or otherwise mishandle their national economies, and foreign exchange speculators made the inevitable collapse happen sooner. A relatively quick collapse might even be preferable to continued economic mishandling, followed by an eventual, larger, collapse. Mahathir Mohamad and other critics of speculation are viewed as trying to deflect the blame from themselves for having caused the unsustainable economic conditions.
Risk aversion in forex

See also: Safe-haven currency


Fig.1 Chart showing MSCI World Index of Equities fell while the US Dollar Index rose.
Risk aversion in the forex is a kind of trading behavior exhibited by the foreign exchange market when a potentially adverse event happens which may affect market conditions. This behavior is caused when risk averse traders liquidate their positions in risky assets and shift the funds to less risky assets due to uncertainty.[25]
In the context of the forex market, traders liquidate their positions in various currencies to take up positions in safe-haven currencies, such as the US Dollar.[26] Sometimes, the choice of a safe haven currency is more of a choice based on prevailing sentiments rather than one of economic statistics. An example would be the Financial Crisis of 2008. The value of equities across world fell while the US Dollar strengthened (see Fig.1). This happened despite the strong focus of the crisis in the USA.[27]

Panasonic Corporation

Image by gregverdino via Flickr
Panasonic Corporation (パナソニック株式会社 Panasonikku Kabushiki-kaisha?), formerly known as Matsushita Electric Industrial Co., Ltd. (松下電器産業株式会社 Matsushita Denki Sangyō Kabushiki-gaisha?), is a Japanese multinational consumer electronics corporation headquartered in Kadoma, Osaka, Japan.[3] Its main business is in electronics manufacturing and it produces products under a variety of names including Panasonic and Technics.
Since its founding in 1918, it has grown to become one of the largest Japanese electronics producers along with Sony and Toshiba. In addition to electronics, Panasonic offers non-electronic products and services such as home renovation services. Panasonic was ranked the 89th-largest company in the world in 2009 by the Forbes Global 2000 and is among the Worldwide Top 20 Semiconductor Sales Leaders.[4]
Contents [hide]
1 Name
2 History
2.1 National/Panasonic bicycles
2.2 Electronics
2.3 Panasonic and Universal
2.4 Acquiring Media Nusantara Citra
2.5 Curtailment
3 Brands and divisions
3.1 Brand names
3.2 Automobile audio
3.3 Panasonic Corporation of North America
3.4 Panasonic Corporation in Europe
3.5 Panasonic Corporation in Serbia
3.6 Panasonic Mobile Communications
3.7 Panasonic Avionics Corporation
4 Partners
5 Sponsorship
6 Environmental record
7 Panasonic in popular culture
8 See also
9 Notes
10 Further reading
11 External links
[edit]Name

For 90 years since establishment, the name of the company was always topped with "松下" ("Matsushita"). The company's name before 1 October 2008 had been "Matsushita Electric Industrial Co., Ltd.", used since 1935.[5][6]
In 1927, the company founder adopted a brand name "National" (ナショナル Nashonaru?) for a new lamp product, knowing "national" meant "of or relating to a people, a nation."[7] In 1955, the company labeled its export audio speakers and lamps "PanaSonic", which was the first time it used its "Panasonic" brand name.[8] The company began to use a brand name "Technics" in 1965.[8] The use of multiple brands lasted for some decades.[8]
In May 2003, the company made "Panasonic" its global brand, and set its global brand slogan, "Panasonic ideas for life."[9] The company began to unify its brands to "Panasonic" and, by March 2004 replaced "National" for products and outdoor signboards, except for those in Japan.[9]
On January 10, 2008, the company announced that. (effective on October 1, 2008) and phase out the brand "National" in Japan, replacing it with the global brand "Panasonic" (by March 2010).[10] The name change was approved at a shareholders' meeting on June 26, 2008[11] after consultation with the Matsushita family.
[edit]History

Panasonic was founded in 1918 by Konosuke Matsushita first selling duplex lamp sockets. In 1927, it produced a bicycle lamp, the first product it marketed under the brand name National. It operated factories in Japan and other parts of Asia through the end of World War II, producing electrical components and appliances such as light fixtures, motors, and electric irons.
After World War II, Panasonic regrouped and began to supply the post war boom in Japan with radios and appliances, as well as bicycles. Matsushita's brother-in-law, Toshio Iue founded Sanyo as a subcontractor for components after WWII. Sanyo grew to become a competitor to Panasonic, but the rivalry settled down and Sanyo were soon to be a subsidiary of Panasonic in December 2009.
[edit]National/Panasonic bicycles
The production of high-quality road and touring bicycles and bicycle components composed a little-known but substantial portion of the appliance division of the National/Panasonic corporation from 1945 through the end of the 1980s. As a child, Konosuke Matsushita, founder of National/Panasonic, had been adopted into a family who owned a small bicycle shop, and was passionate about bicycles and cycling.[12]
National and Panasonic bicycles were sold both in Japan and overseas to various retailers, who sometimes rebadged the bikes with private labels. Despite competition from other Japanese manufacturers, Matsushita enacted a corporate policy forbidding low quality in Panasonic bicycles no matter what the profit margins. When Schwinn was forced by economics to outsource bicycles built overseas, they chose the Panasonic World series, a successful model in production from 1972. As the only vendor to meet Schwinn's rigid manufacturing and production standards, Panasonic built several models for Schwinn, such as the World Traveller and the World Voyager. During the 1970s and 1980s, Panasonic produced a full range of rugged steel frame bicycles, produced in modern factories complete with robotic welding/brazing and advanced paint application equipment. Panasonic's bicycle tires had higher thread counts and thicker treads than their competition, and established a reputation for uniformity and high quality.[13]
From 1985 on, steady increases in the value of the Japanese yen and lower cost competition from Taiwan made Panasonic bicycles less competitive in the U.S. and other markets. Panasonic began to sell rebadged bikes made in Taiwan under their name. By 1989, Panasonic division managers were reporting that bicycles brought less revenue (and less profit) per square foot of warehouse than any other product in the corporate division. Following the death of Konosuke Matsushita, Panasonic abandoned the US bicycle market at the end of September, 1989.[13] Panasonic currently produces hand built frames in Japan for keirin track racing under Nihon Jitensha Shinkokai (NJS) approved standards.
[edit]Electronics


Panasonic DR48/RF-4800 desktop shortwave radio receiver (1976)
In 1961, Konosuke Matsushita traveled to the United States and met with American dealers. Panasonic began producing television sets for the U.S. market under the Panasonic brand name, and expanded the use of the brand to Europe in 1979.[14]
The company used the National trademark outside of North America during the 1950s through the 1970s. (The trademark could not be used in the USA, probably because it was already in use by the National Radio Company who were operating in a closely related product area.) It sold televisions, hi-fidelity stereo receivers, multi-band shortwave radios, and marine radio direction finders, often exported to North America under various U.S. brand names. The company also developed a line of home appliances such as rice cookers for the Japanese and Asian markets. In India, Panasonic is among the top 100 Most Trusted brands listed by The Brand Trust Report . Rapid growth resulted in the company opening manufacturing plants around the world. National/Panasonic quickly developed a reputation for well-made, reliable products.
The company debuted a hi-fidelity audio speaker in Japan in 1965 with the brand Technics. This line of high quality stereo components became worldwide favorites. The most famous products being its turntables, such as the SL-1200 record player, known for its high performance, precision, and durability. Throughout the 1970s and early 1980s, Panasonic continued to produce high-quality specialized electronics for niche markets such as shortwave radios, as well as developing a successful line of stereo receivers, CD players, and other components.
In 1983 the Panasonic Senior Partner IBM PC compatible computer featured a built-in printer and became the first Japanese-made computer to offer full IBM compatibility[15]


Panasonic in Kadoma, Osaka, Japan. Foreground left: Panasonic Konosuke Matsushita Museum; behind: Corporate R&D laboratories
Since 2004, Toyota has used Panasonic batteries for its Toyota Prius, an environmentally friendly car made in Japan.[16]
On January 19, 2006 Panasonic announced that, starting in February, it will stop producing analog televisions (then 30% of its total TV business) to concentrate on digital TVs.[17]
On November 3, 2008 Panasonic and Sanyo were in talks, resulting in the eventual acquisition of Sanyo. The merger was completed in December 2009, and resulted in a mega-corporation with revenues over ¥11.2 trillion (around $110 billion). As part of what will be Japan's biggest electronics company, the Sanyo brand and most of the employees will be retained as a subsidiary.[18][19]
In November 1999, the Japan Times reported that Panasonic planned to develop a "next generation first aid kit" called the Electronic Health Checker. At the time, the target market was said to be elderly people, especially those living in rural areas where medical help might not be immediately available, so it was planned that the kit would include support for telemedicine. The kits were then in the testing stage, with plans for eventual overseas distribution, to include the United States.
In recent years the company has been involved with the development of high-density optical disc standards intended to eventually replace the DVD and the SD memory card.
On July 29, 2010 Panasonic reached an agreement to acquire the remaining shares of Panasonic Electric Works and Sanyo shares for $9.4 billion.[20][21][22]
[edit]Panasonic and Universal
Panasonic used to own Universal Studios, then known as the Music Corporation of America, since acquiring the company in 1990 but sold it to Seagram in 1995. Universal Studios is now a unit of NBC Universal.
[edit]Acquiring Media Nusantara Citra
Panasonic acquired Media Nusantara Citra in 2003 that have RCTI , Global TV and MNCTV[citation needed]. Media Nusantara Citra also acquired Femina Group.
[edit]Curtailment
April 2011: The company will cut its work force by 40,000 mainly from overseas division by the end of fiscal 2012 in a bid to streamline overlapping operations. The curtailment is about 10 percent of its group work force.[23]
[edit]Brands and divisions

[edit]Brand names
Panasonic produces electronic products under a variety of names, including:
Panasonic (home appliances, personal electronics, audio/video equipment, microchips, automotive components)
Technics (music equipment like headphones and turntables, overlaps with Panasonic branded products in some audio categories)
Sanyo became a subsidiary of Panasonic on December 21, 2009.
[edit]Automobile audio
Panasonic sells radio (audio) products for automobiles and light trucks in the US market under the Panasonic brand (aftermarket) and as OEM equipment in Japanese automobile brands such as Toyota, Honda and Subaru. Non-Japanese automakers such as GM and Volkswagen have also used OEM stereos made by Panasonic.
[edit]Panasonic Corporation of North America
Panasonic Corporation of North America is the name of the company's USA division, currently headquartered in Secaucus, New Jersey.[24] Founded in New York City at the MetLife Building in September 1959, it was known as Matsushita Electric Corporation of America (MECA) prior to 2005.
[edit]Panasonic Corporation in Europe
Shop@Panasonic is a chain of stores in the United Kingdom and Ireland which sells only Panasonic electronics. The store is based on the same structure as Sony Centre. The stores are usually located in shopping centres such as Centrale, and brand itself the official Panasonic retailer.
Since 2008 shop@Panasonic stores officially rebranded to "Panasonic Store".
[edit]Panasonic Corporation in Serbia
In November 2010, Panasonic Electric Works established Panasonic Electric Works Vossloh-Schwabe Serbia d.o.o, a new company in Svilajnac, Serbia, to manufacture energy-efficient electronic devices (ballasts) for lighting fixtures. Volume production will commence in January 2011.[25]
[edit]Panasonic Mobile Communications
Panasonic Mobile Communications manufactures mobile handsets and related equipment for the Japanese market. It has the second largest market share for mobile phones in Japan after Sharp. It used to market its GSM phones worldwide, but in December 2005 the company announced its withdrawal from overseas markets. In summer 2008 rumors emerged that the company was considering to re-enter the Asian market with its VS84 handset.
[edit]Panasonic Avionics Corporation
Panasonic Avionics Corporation[26] (PAC), a subsidiary of Panasonic Corporation of North America, is the world's leading supplier of in-flight entertainment (IFE) and communication systems. Headquartered in Lake Forest, California where engineering, development and testing is performed while system installation, field engineering, major quality functions, certification and program management are performed at the Bothell, Washington facility - Panasonic Avionics Corporation employs approximately 2,800 employees based in over 70 locations worldwide, with major facilities in London, Toulouse, Hamburg, Dallas, Dubai and Singapore. A majority of the component manufacturing is carried out in Osaka, Japan.
The company provides airline passengers with a wide array of interactive applications at their seats, combining entertainment (digital music and movies on demand, games, interactive moving maps, satellite TV, and online shopping) with business tools (E-mail, live flight schedules, and in-flight internet access). PAC is also one of the chief suppliers to both Boeing and Airbus and their IFE systems will be featured on both the Boeing 787 Dreamliner and the Airbus A380 aircraft. Among the many worldwide customers that use PAC systems are award-winning airlines such as Qantas, Emirates, Singapore Airlines and Virgin Atlantic.
[edit]Partners

In early 2008, Panasonic partnered with Shopatron to handle its online order fulfillment, incorporating retailers into the online sale.[27]
[edit]Sponsorship



Panasonic were the principal sponsors of the now defunct Toyota Racing Formula One team.
Panasonic were a primary sponsor of Toyota's Formula One program, Panasonic Toyota Racing. Hiro Matsushita, grandson of the company founder, is a former race car driver who run a company overseeing sponsorship arrangements for the company.
Panasonic is an official partner and sponsor of Major League Soccer.
Panasonic has sponsored some professional filmmakers by allowing them to borrow the Camera for their projects. One such Panasonic_Lumix_DMC-GH1 model camera was used to film the pilot of the Swedish Horror Film Marianne . [28]
Panasonic also owns Gamba Osaka, a team from the J. League, the main Japanese soccer league.
Panasonic sponsored Sterling Marlin in the Nextel Cup Series. Panasonic was to sponsor the 14 in 24 races but the team shut down in July
Panasonic is the primary sponsor of the 2007 World Solar Challenge.[29]
Panasonic has been a "top" sponsor of the Olympic Games since Seoul in 1988
Panasonic is the Official Worldwide Olympic Partner for 2008 Summer Olympics.
They were originally the official partner and sponsor of the Boston Celtics from 1975 to 1989, along with Technics. Various Panasonic ads appear at the old Boston Garden during the 1980s.
Between 1981-83 Panasonic were the shirt sponsors of English football club Nottingham Forest F.C.
Panasonic on January 16, 2010, signed a 3 year, Rs. 4.7 crores ($1 million USD) jersey sposnorship deal for the India national football team.
[edit]Environmental record

Panasonic is ranked on 6th place out of 18 in Greenpeace’s Guide to Greener Electronics (company shares 6th place with its competitors Motorola and Sony). The company mainly gains its points for the voluntary take-back of its products, in particular for launching the first programme for the take-back of TVs in a non-OECD country. Despite this, it is still weakest on the criteria relating to e-waste and recycling and scores best on the chemicals and energy criteria.[30]

The company is aiming to discontinue use of PVC in internal wiring of new products globally by March 2011. [31] It is also planning to eliminate the use of PVC in notebooks by the end of 2011 globally. All new models of mobile phones and computers should be free of BFRs by 2011, but there is no commitment to eliminate BFRs and PVC from Panasonic’s whole product portfolio.[32]
Panasonic gets full marks in the Greenpeace’s ranking for reporting that 100% of new models of TVs meet the latest ES requirement, and most models (nearly 84%) exceed the standby mode requirement by 70% or more.[32]
[edit]Panasonic in popular culture


This "In popular culture" section may contain minor or trivial references. Please reorganize this content to explain the subject's impact on popular culture rather than simply listing appearances, and remove trivial references. (September 2009)
In the popular Japanese Asahi Broadcasting Corporation program Panel Quiz Attack 25, the panel used in the stage setup was developed by Panasonic During the early days of the show, Panasonic's technical staff was stationed at the recording studio, in case of any unexpected occurrences.[citation needed]
Panasonic is also known for featuring Japanese pop superstar Ayumi Hamasaki in their TV commercials.
Pan Sonic, the Finnish experimental electronic music duo was originally called Panasonic, but the name was changed after the corporation threatened with legal action.

Panasonic Corporation

Image by gregverdino via Flickr
Panasonic Corporation (パナソニック株式会社 Panasonikku Kabushiki-kaisha?), formerly known as Matsushita Electric Industrial Co., Ltd. (松下電器産業株式会社 Matsushita Denki Sangyō Kabushiki-gaisha?), is a Japanese multinational consumer electronics corporation headquartered in Kadoma, Osaka, Japan.[3] Its main business is in electronics manufacturing and it produces products under a variety of names including Panasonic and Technics.
Since its founding in 1918, it has grown to become one of the largest Japanese electronics producers along with Sony and Toshiba. In addition to electronics, Panasonic offers non-electronic products and services such as home renovation services. Panasonic was ranked the 89th-largest company in the world in 2009 by the Forbes Global 2000 and is among the Worldwide Top 20 Semiconductor Sales Leaders.[4]
Contents [hide]
1 Name
2 History
2.1 National/Panasonic bicycles
2.2 Electronics
2.3 Panasonic and Universal
2.4 Acquiring Media Nusantara Citra
2.5 Curtailment
3 Brands and divisions
3.1 Brand names
3.2 Automobile audio
3.3 Panasonic Corporation of North America
3.4 Panasonic Corporation in Europe
3.5 Panasonic Corporation in Serbia
3.6 Panasonic Mobile Communications
3.7 Panasonic Avionics Corporation
4 Partners
5 Sponsorship
6 Environmental record
7 Panasonic in popular culture
8 See also
9 Notes
10 Further reading
11 External links
[edit]Name

For 90 years since establishment, the name of the company was always topped with "松下" ("Matsushita"). The company's name before 1 October 2008 had been "Matsushita Electric Industrial Co., Ltd.", used since 1935.[5][6]
In 1927, the company founder adopted a brand name "National" (ナショナル Nashonaru?) for a new lamp product, knowing "national" meant "of or relating to a people, a nation."[7] In 1955, the company labeled its export audio speakers and lamps "PanaSonic", which was the first time it used its "Panasonic" brand name.[8] The company began to use a brand name "Technics" in 1965.[8] The use of multiple brands lasted for some decades.[8]
In May 2003, the company made "Panasonic" its global brand, and set its global brand slogan, "Panasonic ideas for life."[9] The company began to unify its brands to "Panasonic" and, by March 2004 replaced "National" for products and outdoor signboards, except for those in Japan.[9]
On January 10, 2008, the company announced that. (effective on October 1, 2008) and phase out the brand "National" in Japan, replacing it with the global brand "Panasonic" (by March 2010).[10] The name change was approved at a shareholders' meeting on June 26, 2008[11] after consultation with the Matsushita family.
[edit]History

Panasonic was founded in 1918 by Konosuke Matsushita first selling duplex lamp sockets. In 1927, it produced a bicycle lamp, the first product it marketed under the brand name National. It operated factories in Japan and other parts of Asia through the end of World War II, producing electrical components and appliances such as light fixtures, motors, and electric irons.
After World War II, Panasonic regrouped and began to supply the post war boom in Japan with radios and appliances, as well as bicycles. Matsushita's brother-in-law, Toshio Iue founded Sanyo as a subcontractor for components after WWII. Sanyo grew to become a competitor to Panasonic, but the rivalry settled down and Sanyo were soon to be a subsidiary of Panasonic in December 2009.
[edit]National/Panasonic bicycles
The production of high-quality road and touring bicycles and bicycle components composed a little-known but substantial portion of the appliance division of the National/Panasonic corporation from 1945 through the end of the 1980s. As a child, Konosuke Matsushita, founder of National/Panasonic, had been adopted into a family who owned a small bicycle shop, and was passionate about bicycles and cycling.[12]
National and Panasonic bicycles were sold both in Japan and overseas to various retailers, who sometimes rebadged the bikes with private labels. Despite competition from other Japanese manufacturers, Matsushita enacted a corporate policy forbidding low quality in Panasonic bicycles no matter what the profit margins. When Schwinn was forced by economics to outsource bicycles built overseas, they chose the Panasonic World series, a successful model in production from 1972. As the only vendor to meet Schwinn's rigid manufacturing and production standards, Panasonic built several models for Schwinn, such as the World Traveller and the World Voyager. During the 1970s and 1980s, Panasonic produced a full range of rugged steel frame bicycles, produced in modern factories complete with robotic welding/brazing and advanced paint application equipment. Panasonic's bicycle tires had higher thread counts and thicker treads than their competition, and established a reputation for uniformity and high quality.[13]
From 1985 on, steady increases in the value of the Japanese yen and lower cost competition from Taiwan made Panasonic bicycles less competitive in the U.S. and other markets. Panasonic began to sell rebadged bikes made in Taiwan under their name. By 1989, Panasonic division managers were reporting that bicycles brought less revenue (and less profit) per square foot of warehouse than any other product in the corporate division. Following the death of Konosuke Matsushita, Panasonic abandoned the US bicycle market at the end of September, 1989.[13] Panasonic currently produces hand built frames in Japan for keirin track racing under Nihon Jitensha Shinkokai (NJS) approved standards.
[edit]Electronics


Panasonic DR48/RF-4800 desktop shortwave radio receiver (1976)
In 1961, Konosuke Matsushita traveled to the United States and met with American dealers. Panasonic began producing television sets for the U.S. market under the Panasonic brand name, and expanded the use of the brand to Europe in 1979.[14]
The company used the National trademark outside of North America during the 1950s through the 1970s. (The trademark could not be used in the USA, probably because it was already in use by the National Radio Company who were operating in a closely related product area.) It sold televisions, hi-fidelity stereo receivers, multi-band shortwave radios, and marine radio direction finders, often exported to North America under various U.S. brand names. The company also developed a line of home appliances such as rice cookers for the Japanese and Asian markets. In India, Panasonic is among the top 100 Most Trusted brands listed by The Brand Trust Report . Rapid growth resulted in the company opening manufacturing plants around the world. National/Panasonic quickly developed a reputation for well-made, reliable products.
The company debuted a hi-fidelity audio speaker in Japan in 1965 with the brand Technics. This line of high quality stereo components became worldwide favorites. The most famous products being its turntables, such as the SL-1200 record player, known for its high performance, precision, and durability. Throughout the 1970s and early 1980s, Panasonic continued to produce high-quality specialized electronics for niche markets such as shortwave radios, as well as developing a successful line of stereo receivers, CD players, and other components.
In 1983 the Panasonic Senior Partner IBM PC compatible computer featured a built-in printer and became the first Japanese-made computer to offer full IBM compatibility[15]


Panasonic in Kadoma, Osaka, Japan. Foreground left: Panasonic Konosuke Matsushita Museum; behind: Corporate R&D laboratories
Since 2004, Toyota has used Panasonic batteries for its Toyota Prius, an environmentally friendly car made in Japan.[16]
On January 19, 2006 Panasonic announced that, starting in February, it will stop producing analog televisions (then 30% of its total TV business) to concentrate on digital TVs.[17]
On November 3, 2008 Panasonic and Sanyo were in talks, resulting in the eventual acquisition of Sanyo. The merger was completed in December 2009, and resulted in a mega-corporation with revenues over ¥11.2 trillion (around $110 billion). As part of what will be Japan's biggest electronics company, the Sanyo brand and most of the employees will be retained as a subsidiary.[18][19]
In November 1999, the Japan Times reported that Panasonic planned to develop a "next generation first aid kit" called the Electronic Health Checker. At the time, the target market was said to be elderly people, especially those living in rural areas where medical help might not be immediately available, so it was planned that the kit would include support for telemedicine. The kits were then in the testing stage, with plans for eventual overseas distribution, to include the United States.
In recent years the company has been involved with the development of high-density optical disc standards intended to eventually replace the DVD and the SD memory card.
On July 29, 2010 Panasonic reached an agreement to acquire the remaining shares of Panasonic Electric Works and Sanyo shares for $9.4 billion.[20][21][22]
[edit]Panasonic and Universal
Panasonic used to own Universal Studios, then known as the Music Corporation of America, since acquiring the company in 1990 but sold it to Seagram in 1995. Universal Studios is now a unit of NBC Universal.
[edit]Acquiring Media Nusantara Citra
Panasonic acquired Media Nusantara Citra in 2003 that have RCTI , Global TV and MNCTV[citation needed]. Media Nusantara Citra also acquired Femina Group.
[edit]Curtailment
April 2011: The company will cut its work force by 40,000 mainly from overseas division by the end of fiscal 2012 in a bid to streamline overlapping operations. The curtailment is about 10 percent of its group work force.[23]
[edit]Brands and divisions

[edit]Brand names
Panasonic produces electronic products under a variety of names, including:
Panasonic (home appliances, personal electronics, audio/video equipment, microchips, automotive components)
Technics (music equipment like headphones and turntables, overlaps with Panasonic branded products in some audio categories)
Sanyo became a subsidiary of Panasonic on December 21, 2009.
[edit]Automobile audio
Panasonic sells radio (audio) products for automobiles and light trucks in the US market under the Panasonic brand (aftermarket) and as OEM equipment in Japanese automobile brands such as Toyota, Honda and Subaru. Non-Japanese automakers such as GM and Volkswagen have also used OEM stereos made by Panasonic.
[edit]Panasonic Corporation of North America
Panasonic Corporation of North America is the name of the company's USA division, currently headquartered in Secaucus, New Jersey.[24] Founded in New York City at the MetLife Building in September 1959, it was known as Matsushita Electric Corporation of America (MECA) prior to 2005.
[edit]Panasonic Corporation in Europe
Shop@Panasonic is a chain of stores in the United Kingdom and Ireland which sells only Panasonic electronics. The store is based on the same structure as Sony Centre. The stores are usually located in shopping centres such as Centrale, and brand itself the official Panasonic retailer.
Since 2008 shop@Panasonic stores officially rebranded to "Panasonic Store".
[edit]Panasonic Corporation in Serbia
In November 2010, Panasonic Electric Works established Panasonic Electric Works Vossloh-Schwabe Serbia d.o.o, a new company in Svilajnac, Serbia, to manufacture energy-efficient electronic devices (ballasts) for lighting fixtures. Volume production will commence in January 2011.[25]
[edit]Panasonic Mobile Communications
Panasonic Mobile Communications manufactures mobile handsets and related equipment for the Japanese market. It has the second largest market share for mobile phones in Japan after Sharp. It used to market its GSM phones worldwide, but in December 2005 the company announced its withdrawal from overseas markets. In summer 2008 rumors emerged that the company was considering to re-enter the Asian market with its VS84 handset.
[edit]Panasonic Avionics Corporation
Panasonic Avionics Corporation[26] (PAC), a subsidiary of Panasonic Corporation of North America, is the world's leading supplier of in-flight entertainment (IFE) and communication systems. Headquartered in Lake Forest, California where engineering, development and testing is performed while system installation, field engineering, major quality functions, certification and program management are performed at the Bothell, Washington facility - Panasonic Avionics Corporation employs approximately 2,800 employees based in over 70 locations worldwide, with major facilities in London, Toulouse, Hamburg, Dallas, Dubai and Singapore. A majority of the component manufacturing is carried out in Osaka, Japan.
The company provides airline passengers with a wide array of interactive applications at their seats, combining entertainment (digital music and movies on demand, games, interactive moving maps, satellite TV, and online shopping) with business tools (E-mail, live flight schedules, and in-flight internet access). PAC is also one of the chief suppliers to both Boeing and Airbus and their IFE systems will be featured on both the Boeing 787 Dreamliner and the Airbus A380 aircraft. Among the many worldwide customers that use PAC systems are award-winning airlines such as Qantas, Emirates, Singapore Airlines and Virgin Atlantic.
[edit]Partners

In early 2008, Panasonic partnered with Shopatron to handle its online order fulfillment, incorporating retailers into the online sale.[27]
[edit]Sponsorship



Panasonic were the principal sponsors of the now defunct Toyota Racing Formula One team.
Panasonic were a primary sponsor of Toyota's Formula One program, Panasonic Toyota Racing. Hiro Matsushita, grandson of the company founder, is a former race car driver who run a company overseeing sponsorship arrangements for the company.
Panasonic is an official partner and sponsor of Major League Soccer.
Panasonic has sponsored some professional filmmakers by allowing them to borrow the Camera for their projects. One such Panasonic_Lumix_DMC-GH1 model camera was used to film the pilot of the Swedish Horror Film Marianne . [28]
Panasonic also owns Gamba Osaka, a team from the J. League, the main Japanese soccer league.
Panasonic sponsored Sterling Marlin in the Nextel Cup Series. Panasonic was to sponsor the 14 in 24 races but the team shut down in July
Panasonic is the primary sponsor of the 2007 World Solar Challenge.[29]
Panasonic has been a "top" sponsor of the Olympic Games since Seoul in 1988
Panasonic is the Official Worldwide Olympic Partner for 2008 Summer Olympics.
They were originally the official partner and sponsor of the Boston Celtics from 1975 to 1989, along with Technics. Various Panasonic ads appear at the old Boston Garden during the 1980s.
Between 1981-83 Panasonic were the shirt sponsors of English football club Nottingham Forest F.C.
Panasonic on January 16, 2010, signed a 3 year, Rs. 4.7 crores ($1 million USD) jersey sposnorship deal for the India national football team.
[edit]Environmental record

Panasonic is ranked on 6th place out of 18 in Greenpeace’s Guide to Greener Electronics (company shares 6th place with its competitors Motorola and Sony). The company mainly gains its points for the voluntary take-back of its products, in particular for launching the first programme for the take-back of TVs in a non-OECD country. Despite this, it is still weakest on the criteria relating to e-waste and recycling and scores best on the chemicals and energy criteria.[30]

The company is aiming to discontinue use of PVC in internal wiring of new products globally by March 2011. [31] It is also planning to eliminate the use of PVC in notebooks by the end of 2011 globally. All new models of mobile phones and computers should be free of BFRs by 2011, but there is no commitment to eliminate BFRs and PVC from Panasonic’s whole product portfolio.[32]
Panasonic gets full marks in the Greenpeace’s ranking for reporting that 100% of new models of TVs meet the latest ES requirement, and most models (nearly 84%) exceed the standby mode requirement by 70% or more.[32]
[edit]Panasonic in popular culture


This "In popular culture" section may contain minor or trivial references. Please reorganize this content to explain the subject's impact on popular culture rather than simply listing appearances, and remove trivial references. (September 2009)
In the popular Japanese Asahi Broadcasting Corporation program Panel Quiz Attack 25, the panel used in the stage setup was developed by Panasonic During the early days of the show, Panasonic's technical staff was stationed at the recording studio, in case of any unexpected occurrences.[citation needed]
Panasonic is also known for featuring Japanese pop superstar Ayumi Hamasaki in their TV commercials.
Pan Sonic, the Finnish experimental electronic music duo was originally called Panasonic, but the name was changed after the corporation threatened with legal action.