What is the value of such a World producing so much worth every year and growing so steadily?<\/p>\n
Two assumptions need to be made:<\/p>\n
- \n
- Perpetuation<\/strong>: the future annual growth rate will repeat the historical one, i.e. 3.32%<\/li>\n
- Yield expectation<\/strong>: for such an investor a minimal return on invested capital should amount\u00a0a modest\u00a08%<\/li>\n<\/ul>\n
In a Net Present Value calculation:<\/p>\n
- \n
- the GDP will augment every year by g<\/strong> (growth rate),<\/li>\n
- and its value will be discounted at i<\/strong> (interest rate).<\/li>\n<\/ul>\n
In the case of perpetuation, the calculation formula is:<\/p>\n
![\"\"](\"http:\/\/blog.mr-int.ch\/wp-content\/uploads\/2010\/12\/NPV-at-perpetuation3.png\" "\\"NPV")
<\/a><\/a><\/p>\nAnd the result is…\u00a0\u00a0\u00a0\u00a0\u00a0 the fantastic sum of $1368 trillions!<\/strong><\/p><\/blockquote>\n
What does this tell us?<\/h4>\n
Put in relation with the stock market:<\/h5>\n
In June 2010 the total market capitalization of all the major exchanges in the World was amounting to $47 trillions (source World Federation of Exchanges).<\/p>\n
But publicly traded companies are not making all the world business. A rough estimate (if someone has data this will be better than this guess and very welcome) is that other privately held companies represent as much value as publicly traded ones: so if these would be valued at the same level as public ones, we would have a Global Market Cap of $94 trillions (47\/0.5).<\/p>\n
But another 50% of the World economy is run by state institutions, so if these would be valued at the same level as public ones (a generous assumption) the Global Market Cap could be $188 trillions<\/strong>.<\/p>\n
Compare with the calculated Net Present Value one can conclude that the World is globally underevaluated by a factor of 1368\/188= 7.27<\/p>\n
So for our investor from an exoplanet it could be a good deal to acquire our Planet Earth at current market value!<\/p>\n
Put in relation with public debt:<\/h5>\n
To fulfill political objectives without instantaneously having to pay for it, governments at all levels (municipal, regional, national) are accumulating debt.<\/p>\n
In 2009 the total external debt of all sovereign nations was 56.9 trillions (source CIA Factbook, cited in Wikipedia), or almost exactly 100% of GDP.<\/p>\n
In 2010 this will have worsened a bit since large countries made huge public deficits that will be transformed into further indebtness.<\/p>\n
But compared\u00a0with our NPV of $1368 trillions, only 56.9 or 4.1% are engaged as debt by the goverments of sovereign countries. Why wouldn’t they continue this trend?<\/p>\n
Solvency:<\/h5>\n
If you cannot trade what you own you just are stuck with it, and it remains equivalent to worthless<\/p>\n
So we still have to wait on our exoplanet investor. And if it would pay us so much for the World: what would we be doing with the proceeds?<\/p>\n
Final word:<\/h5>\n
All this may be wrong: World GDP cannot be confused with net cash flow for a discounted calculation.
\nBut isn’t it \u00ab\u00a0interesting\u00a0\u00bb to look at these things with such an approach?<\/p>\n","protected":false},"excerpt":{"rendered":"What would an investor coming from an exoplanet be ready to pay to acquire our Planet Earth?<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":2,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[7],"tags":[],"class_list":["post-76","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts\/76","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=76"}],"version-history":[{"count":0,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts\/76\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=76"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=76"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=76"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- and its value will be discounted at i<\/strong> (interest rate).<\/li>\n<\/ul>\n
- Yield expectation<\/strong>: for such an investor a minimal return on invested capital should amount\u00a0a modest\u00a08%<\/li>\n<\/ul>\n
![<\/a><\/p>\nAnd the result is…\u00a0\u00a0\u00a0\u00a0\u00a0 the fantastic sum of $1368 trillions!<\/strong><\/p><\/blockquote>\nWhat does this tell us?<\/h4>\nPut in relation with the stock market:<\/h5>\nIn June 2010 the total market capitalization of all the major exchanges in the World was amounting to $47 trillions (source World Federation of Exchanges).<\/p>\nBut publicly traded companies are not making all the world business. A rough estimate (if someone has data this will be better than this guess and very welcome) is that other privately held companies represent as much value as publicly traded ones: so if these would be valued at the same level as public ones, we would have a Global Market Cap of $94 trillions (47\/0.5).<\/p>\nBut another 50% of the World economy is run by state institutions, so if these would be valued at the same level as public ones (a generous assumption) the Global Market Cap could be $188 trillions<\/strong>.<\/p>\nCompare with the calculated Net Present Value one can conclude that the World is globally underevaluated by a factor of 1368\/188= 7.27<\/p>\nSo for our investor from an exoplanet it could be a good deal to acquire our Planet Earth at current market value!<\/p>\nPut in relation with public debt:<\/h5>\nTo fulfill political objectives without instantaneously having to pay for it, governments at all levels (municipal, regional, national) are accumulating debt.<\/p>\nIn 2009 the total external debt of all sovereign nations was 56.9 trillions (source CIA Factbook, cited in Wikipedia), or almost exactly 100% of GDP.<\/p>\nIn 2010 this will have worsened a bit since large countries made huge public deficits that will be transformed into further indebtness.<\/p>\nBut compared\u00a0with our NPV of $1368 trillions, only 56.9 or 4.1% are engaged as debt by the goverments of sovereign countries. Why wouldn’t they continue this trend?<\/p>\nSolvency:<\/h5>\nIf you cannot trade what you own you just are stuck with it, and it remains equivalent to worthless<\/p>\nSo we still have to wait on our exoplanet investor. And if it would pay us so much for the World: what would we be doing with the proceeds?<\/p>\nFinal word:<\/h5>\nAll this may be wrong: World GDP cannot be confused with net cash flow for a discounted calculation.\nBut isn’t it \u00ab\u00a0interesting\u00a0\u00bb to look at these things with such an approach?<\/p>\n","protected":false},"excerpt":{"rendered":"What would an investor coming from an exoplanet be ready to pay to acquire our Planet Earth?<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":2,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[7],"tags":[],"class_list":["post-76","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts\/76","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=76"}],"version-history":[{"count":0,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=\/wp\/v2\/posts\/76\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=76"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=76"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.mr-int.ch\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=76"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"http:\/\/blog.mr-int.ch\/wp-content\/uploads\/2010\/12\/NPV-at-perpetuation2.png\"){kind=link}