Reducing the capital needs of European companies
According to Robert Peston , European corporations are going to have to repay about $1 trillion of debt in 2009. $800 billion is owed by financial companies and $200 billion by non-financial, which provides some reassurance - no doubt much of the financial debt is owed to other financial companies and some will net out. But without further huge government guarantees (and we might get them anyway) I think we are going to have to restructure some businesses to operate on less capital. Here is a list of ways in which they may be able to do that: Change in revenue and pricing models. One example is a method called structured pricing , where payment for goods and services is made after the fact based on the value they create. I have developed a model which shows that this can reduce the capital requirements of the economy by around 7-10%; I will be posting a more detailed paper on this within the next few weeks. Of course there are many other examples of how to do this, but it is definitely...