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<ul><li><keyword id="54613" type="COMPANY" weightage="20" keywordseo="makemytrip">MakeMyTrip</keyword> has laid off 350 employees as the coronavirus pandemic has ravaged the travel and tourism industry. </li><li>Group chairman Deep Kalra and CEO Rajesh Magow said in an email to employees on Friday that the pandemic has changed the context and viability of some of their business lines. </li><li>The top management had earlier said that they will be foregoing their full year salary. </li></ul>India’s largest travel aggregator MakeMyTrip has laid off <a href="https://www.cnbctv18.com/travel/covid-19-impact-makemytrip-lays-off-350-employees-as-travel-industry-hit-6042061.htm">350 employees</a> as the coronavirus pandemic has ravaged the travel and tourism industry. <br /><br />“It’s become agonisingly clear that there are certain lines of business (LoBs) that are far deeply affected and will take much longer than the others to recover. As we revisited some of our strategic imperatives to be able to sustain our business in the long term, it is evident that the pandemic has changed the context and viability of some of our business lines in its current form. Keeping this in mind we have had to take this sad but inevitable decision of rightsizing our workforce in these businesses,” founder Deep Kalra and CEO Rajesh Magow said in an email to employees on Friday.<br /><br />The NASDAQ listed company has also seen its share prices fall by 32.9% since the beginning of the year.<br /><br />With the uncertainty all around, the travel industry had been estimated to be hit the worst. A report by the <a href="https://www.weforum.org/agenda/2020/03/world-travel-coronavirus-covid19-jobs-pandemic-tourism-aviation/">World Economic Forum </a>said that the World Travel and Tourism Council has warned the coronavirus pandemic could result in 50 million jobs being cut worldwide in the travel and tourism industry.<br /><br />MMT group Chairman Deep Kalra and CEO Rajesh Magow had earlier said that they will be foregoing their salary from April 2020. <br /><br />“We have tried to do our best to offer support including Mediclaim coverage for individuals and their families till the end of the year, leave encashment, gratuity, retaining the right to exercise part of RSUs (restricted stock units) as applicable, retention of company laptops and outplacement support apart from salary payments as per their notice periods,” said the top management in the email. <br /><br />As the travel and tourism business had come to a complete stop, MMT had also announced its foray into food delivery. The company rolled out an online gourmet delivery service in partnership with luxury and premium hotel chains and independent properties across cities in India.<br /><br />SEE ALSO:<br /><a href="https://www.businessinsider.in/business/startups/news/bharatpe-laid-off-several-employees-after-announcing-salary-hikes-in-april/articleshow/76128348.cms">BharatPe laid off several employees after announcing salary hikes in April</a><br /><br /><a href="http://businessinsider.in/business/corporates/news/infosys-reportedly-plans-to-reduce-the-number-of-managers-the-ceo-and-coo-got-over-25-salary-raise-in-fy20/articleshow/76127600.cms">Infosys reportedly plans to reduce the number of managers— the CEO and COO got over 25% salary raise in FY20</a><br /><br /><a href="https://www.businessinsider.in/business/corporates/news/hindustan-unilever-limited-ceo-sanjiv-mehta-says-the-product-inventory-range-will-be-smaller-and-simpler-hereon/articleshow/76128468.cms">HUL CEO says the product inventory range will be smaller and simpler hereon⁠— analysts believe others may have the same plan</a><br />

MakeMyTrip fires 350 employees as company looks for ways to sustain during the Covid19 pandemic

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Spencer Platt/Getty</span></p><p class="caption">Alexandria Ocasio-Cortez in New York City on July 12, 2018.</p></div><p></p></div></div></p><ul><li><strong>The Democratic party's rising star, Congresswoman Alexandria Ocasio-Cortez, is a champion of Modern Monetary Theory, which holds that federal deficits aren't as bad as we've always believed.</strong></li><li><strong>Naturally, conservatives are freaking out about what this would do to public sector balance sheets.</strong></li><li><strong>But the real issue is what Wall Street and corporate America would do under MMT - and that's borrow money to buyback shares and boost CEO paydays.</strong></li></ul><p>It seems the entire conservative universe is freaking out about Congresswoman Alexandria Ocasio-Cortez (D-NY). They've come up with a lot of reasons for it, but chief among them are her ideas about the economy.</p><p>In an interview with <a href="https://www.businessinsider.com/alexandria-ocasio-cortez-ommt-modern-monetary-theory-how-pay-for-policies-2019-1">Business Insider</a>, Ocasio-Cortez said Modern Monetary Theory (MMT) should "absolutely" be a part of our conversation about the economy. It's a theory that holds that deficit spending isn't nearly as toxic as we've come to believe over the last 40 years - and that it's, in fact, a useful tool. To manage it, you keep interest rates low and when the economy runs too hot, you raise taxes.</p><p>That sound you're hearing is 1,000 deficit hawks weeping.</p><p>You'll find a lot of those people on Wall Street. At the beginning of the financial crisis, they warned a combination of deficit spending on bailouts and the expansion of the Fed's balance sheet would surely lead to rampant inflation (it didn't). These are also often the people you'll hear at country clubs and steakhouses waxing about fiscal responsibility and the virtue of balancing the federal budget.</p><p>The reality is, though, that they should love MMT.<em> It's easy money. </em>And they've actually been living in a shade of it for the last decade - a time when the S&amp;P 500 rose year after year as surely as the sun would shine.</p><h2>This is Wall Street, this is Wall Street on easy money</h2><p>MMT is not really that insane.</p><p>It's first precept is one widely held as an economy truth - the countries that create their own currency will never go bust. That means deficits aren't nearly the problem we've thought they were since the 80s, and it means we don't have to raise taxes to increase spending.</p><p>To get away with this, you'll need to keep interest rates low. As Josh Barro over at <a href="http://nymag.com/intelligencer/2019/01/modern-monetary-theory-doesnt-make-single-payer-any-easier.html">New York Magazine</a> pointed out, one of MMT's founders thinks rates should be kept <a href="https://www.huffingtonpost.com/warren-mosler/proposals-for-the-banking_b_432105.html">permanently at zero.</a></p><p>What MMT adherents do accept is the running deficits can lead to inflation. When that happens, the government will raise taxes to cool the economy. That, MMT adherents say, is the purpose of taxes, controlling inflation, not raising revenue. In our current system, it's the opposite. The Fed controls inflation with interest rates, and the government raises revenue.</p><p>It isn't the public sector we need to worry about the most in this framework, it's the private sector. For the Wall Street I've covered for the past 8 years, MMT looks like a heady brew of easy money, major paydays for CEOs, and a chance to let K Street show its worth.</p><p>For the last 10 years we've had rates at zero and deficit spending, and last year Wall Street got the tax cut it's been asking the GOP for for ages. These were some golden years if you played them right.</p><p>But, besides the fact that we're now watching the stock-market bubble pop (which won't happen in an MMT world because rates won't go up), we saw some pretty unproductive behavior from corporate America and the bankers who love it.</p><p>For one thing, since money was easy, corporate America went to town borrowing money - so much so that now people are saying the corporate bond market <a href="https://www.barrons.com/articles/the-bubble-in-bonds-probably-isnt-ready-to-burst-1542393860?refsec=bonds">is in a bubble.</a></p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Institute of International Finance</span></p></div><p></p></div></div></p><p>And what did corporate America do with that money? <a href="https://nypost.com/2017/08/19/us-companies-spent-4t-buying-back-their-own-stock/">Analysts estimate</a> that from 2008 to 2017 corporations spent $4 trillion buying back stock, and since interest rates were low they borrowed money to do it. Trump's tax cuts majorly juiced that, and Goldman Sachs estimated that companies would spend as much as <a href="https://www.businessinsider.com/trump-tax-reform-could-lead-to-more-buybacks-not-pro-growth-spending-2016-11">$1 trillion on buybacks in 2018,</a> up 46% from the year before. </p><p>After the tax cuts passed, Wells Fargo authorized $40.6 billion in buybacks, with $8.2 billion of it spent in the first nine months of last year. The left-leaning think tank <a href="http://rooseveltinstitute.org/what-wells-fargos-40-6-billion-stock-buybacks-could-have-meant-its-employees-and-customers/">The Roosevelt Institute</a> calculated that if that $8.2 billion had been passed on to workers in the form of a wage increase, every employee could've taken home an extra <span>$31,214. Instead, Wells Fargo announced layoffs of as many as 26,000 people over the next 3 years.</span></p><p>According to the <a href="https://www.nber.org/digest/nov98/w6467.html">National Bureau of Economic Research</a>, you can chalk some of this borrow and buyback behavior up to the way CEOs get paid - largely in stock. It's one of the reasons CEO compensation has been <a href="https://www.epi.org/publication/ceo-compensation-surged-in-2017/">steadily rising for years.</a></p><p>We've been taught to believe the government wastes money and the private sector uses it judiciously, but it's hard to believe that when you look at what Wall Street and corporate America have done with easy money for the last decade.</p><p>And if you think that was unproductive, imagine how much money Wall Street and corporate America would spend on lobbying in an MMT world. K Street would explode. The lobbyists would all be stalking the halls of Congress for their corporate masters, trying to get loopholes written into the tax legislation when the economy gets too hot and taxes have to go up. </p><h2>Get money out of <keyword id="6358883" type="UNKNOWN" weightage="60" keywordseo="politics">politics</keyword> (even if there's no MMT)</h2><p>So to do MMT in any credible fashion, we would have to get money out of politics (which Ocasio-Cortez is for, as are most Americans, <a href="http://www.pewresearch.org/fact-tank/2018/05/08/most-americans-want-to-limit-campaign-spending-say-big-donors-have-greater-political-influence/">according to Pew Research.</a>) We would have change the way CEOs are paid, and completely overhaul the tax code - or even the way we think of taxes (some MMTers actually think corporate taxes <a href="http://www.binzagr-institute.org/wp-content/uploads/2017/11/WP-118.pdf">encourage bad behavior - Wall Street should love that).</a></p><p>Now to be fair, this is pure MMT, and it doesn't sound like Ocasio-Cortez is proposing that at all. If she were, she wouldn't have proposed raising the tax rate on incomes over $10 million to 70%.</p><p>What she has openly said she's doing is injecting it into economic debate - <a href="https://www.businessinsider.com/alexandria-ocasio-cortez-changing-how-americans-think-about-economics-2019-1">a debate that hasn't really changed in about 40 years.</a> We need this badly, and we need it because over the past 10 years we've learned that a bunch of the things we took for granted as economic gospel were wrong. The inflation they feared never showed up.</p><p>As investor and former US Treasury economist Mark Dow put it most succinctly:</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span><a href="https://twitter.com/mark_dow/status/1083368084822355968">Twitter/@mark_dow</a></span></p></div><p></p></div></div></p><p>If anything, the precepts of MMT would encourage drunken-sailor behavior from the private sector, not necessarily the public sector. And we know it, because we're seeing it right before our eyes.</p><p class="tagline">This is an <keyword id="6356002" type="UNKNOWN" weightage="100" keywordseo="opinion">opinion</keyword> column. The thoughts expressed are those of the author.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="https://www.businessinsider.com/50-lane-holiday-traffic-jam-beijing-hong-kong-macau-expressway-asia-new-year-2017-1">This 50-lane holiday traffic jam in China will make you regret ever complaining about your commute</a></h3>        <div>                    </div>    </div>

Wall Street should love the economic theory Alexandria Ocasio-Cortez backs - and that should worry the rest of us

<ul class="summary-list"><li>A <keyword id="1174772" type="PERSON" weightage="60" keywordseo="business-cycle">business cycle</keyword> is the periodic growth and decline of a nation's economy, measured mainly by its GDP.</li><li>Governments try to manage business cycles by spending, raising or lowering taxes, and adjusting interest rates.</li><li>Business cycles can affect individuals in a number of ways, from job-hunting to investing.</li></ul><p>A business cycle, sometimes called a "trade cycle" or "economic cycle," refers to a series of stages in the economy as it expands and contracts. Constantly repeating, it is primarily measured by the rise and fall of gross domestic product (GDP) in a country.</p><p>Business cycles are universal to all nations that have capitalistic economies. All such economies will experience these natural periods of growth and declines, though not all at the same time. However, given the increased globalization, business cycles tend to happen at similar times across countries more often than they did before.</p><p>Understanding the different phases of a business cycle can help individuals make lifestyle decisions, investors make financial decisions, and governments make appropriate policy decisions.</p><h2>Stages of a business cycle</h2><p>Think of business cycles like the tides: a natural, never-ending ebb and flow from high tide to low tide. And the same way the waves can suddenly seem to surge even when the tide's going out or seem low when the tide's coming in, there can be interim, contrarian bumps — either up or down — in the midst of particular phase.</p><div type="image" title="Business Cycle" height="3792" width="5000" msid="77793775" hostid="261"></div><p>All business cycles are bookended by a sustained period of economic growth, followed by a sustained period of economic decline. Throughout its life, a business cycle goes through four identifiable stages, known as phases: expansion, peak, contraction, and trough.</p><p><strong>Expansion: </strong>Expansion, considered the "normal" — or at least, the most desirable — state of the economy, is an up period. During an expansion, businesses and companies are steadily growing their production and profits, unemployment remains low, and the stock market is performing well. Consumers are buying and investing, and with this increasing demand for goods and services, prices begin to rise too.</p><p>When the GDP growth rate is in the 2% to 3% range, inflation is at the 2% target, unemployment is between 3.5% and 4.5%, and the stock market is a bull market, then the economy is considered to be in a healthy period of expansion.</p><p><strong>Peak:</strong> Once these numbers start to increase outside of their traditional bands, though, then the economy is considered to be growing out of control. Companies may be expanding recklessly. Investors are overconfident, buying up assets and significantly increasing their prices, which are not supported by their underlying value. Everything is starting to cost too much.</p><p>The peak marks the climax of all this feverish activity. It occurs when the expansion has reached its end and indicates that production and prices have reached their limit. This is the turning point: With no room for growth left, there's nowhere to go but down. A contraction is forthcoming.</p><p><strong>Contraction</strong>: A contraction spans the length of time from the peak to the trough. It's the period when economic activity is on the way down. During a contraction, unemployment numbers typically spike, stocks enter a bear market, and GDP growth is below 2%, indicating that businesses have cut back their activities. </p><p>When the GDP has declined for two consecutive quarters, <a href="https://www.businessinsider.com/what-is-a-recession" target="_blank" rel="noopener">the economy is often considered to be in a recession</a>. </p><p><strong>Trough: </strong>As the peak is the cycle's high point, the trough is its low point. It occurs when the <keyword id="6357558" type="DEFINITION" weightage="60" keywordseo="Recession">recession</keyword>, or contraction phase, bottoms out and starts to rebound into an expansion phase — and the business cycle starts all over again. The rebound is not always quick, nor is it a straight line, along the way towards full economic recovery. </p><h2><strong>Business cycles vs. market cycles</strong></h2><p>Though often used interchangeably, technically a business cycle is different from a market cycle. A market cycle specifically refers to the different growth and decline stages of the stock market, while the business cycle reflects the economy as a whole.</p><p>But the two are definitely related. The stock market is greatly influenced by the phases of a business cycle and generally mirrors its stages. During the contractionary phase of a cycle, investors sell their holdings, depressing stock prices — a bear market. In the expansionary phase, the opposite occurs: Investors go on a buying spree, causing stock prices to rise — a bull market.</p><h2><strong>Who measures business cycles? </strong></h2><p>In the US, business cycles are defined and measured by the National Bureau of Economic Research (<a href="https://www.nber.org/" target="_blank" rel="noopener">NBER</a>), a private nonprofit. NBER's <a href="http://www.nber.org/cycles/recession.html" target="_blank" rel="noopener">Business Cycle Dating Committee</a> is responsible for determining the start and end of a cycle.</p><p>NBER primarily uses quarterly GDP growth rates to identify a business cycle, but it will also look at other economic indicators, such as real income, retail revenues, employment, and manufacturing output. Analysts and economists often see what they call "co-movement" in these variables, meaning the different measurements rise and fall together.</p><p>For example, if employment is up, production is likely up, as is consumer spending. Likewise, if employment is down, the other metrics are down and will eventually have an impact on GDP. </p><h2><strong>How long does a business cycle last?</strong></h2><p>Business cycles have no defined time frames. A business cycle can be short, lasting a few months, or long, lasting several years. </p><p>Generally, periods of expansion are more prolonged than periods of contraction, but the actual lengths can vary. Since the end of World War II, the average period of expansion in the US lasted 65 months, and the average contraction lasted about 11 months, according to the <a href="https://fas.org/sgp/crs/misc/IF10411.pdf" target="_blank" rel="noopener">Congressional Research Service</a>.</p><p>Most recently, the US hit a peak in February 2020, and before that was in a period of expansion that had lasted roughly 128 months, making it the longest in recorded history.</p><p>The many variables in an economy fluctuate differently over time, causing shifts in the economy, and non-economic factors, such as natural disasters and disease, play a part in shaping the economy as well. "Essentially, market economies want to expand, but if they're hit by an adverse shock, they may contract," says Vincent Reinhart, chief economist and macro strategist at Mellon Investments.</p><p>In recent history, the subprime mortgage crisis of 2007 was one such shock, and the onset of the COVID-19 pandemic in 2020 was another. </p><h2><strong>What factors shape a business cycle? </strong></h2><p>From technological innovations to wars, a variety of things can trigger a business cycle's phases. But, according to the Congressional Research Service, the key influence boils down to the aggregate supply and demand within an economy — economist-speak for the total spending that individuals and companies do. When that demand decreases, a contraction occurs. Likewise, when demand increases, an expansion occurs. </p><h3>How supply and demand drives the business cycle</h3><ul><li><strong>In the beginning:</strong> The <em>expansion</em> happens because consumers are confident in the economy. They believe that employment is steady and income is guaranteed. As a result, they spend more, which leads to increased demand, which leads to businesses hiring more employees and increasing capital expenditures to meet that demand. Investors allocate more capital to assets, increasing stock prices.</li><li><strong>Getting overheated:</strong> The expansionary phase hits a <em>peak</em> when the demand is greater than the supply, and businesses take on additional risks to meet increased demand and remain competitive.</li><li><strong>Scaling back:</strong> When interest rates rise quickly, inflation increases too fast, or a financial crisis occurs, an economy enters a <em>contraction</em>. The confidence that stimulated it quickly evaporates, replaced with dwindling consumer confidence. Individuals save money rather than spend, reducing demand, and businesses cut production and layoff employees as their sales dry up. Investors sell stocks to avoid a drop in the value of their portfolios.</li><li><strong>Hitting bottom:</strong> During the <em>trough</em> phase, demand and production are at their lowest point. But eventually, needs reassert themselves. Consumers slowly start to gain confidence as production and business activity starts to improve, often spurred on by government policies and action. They begin to buy and invest, and the economy enters a new expansion phase.</li></ul><h2><strong>How governments influence business cycles</strong></h2><p>The fact that business cycles move in natural phases doesn't mean they can't be influenced. Countries can and do try to manage the various stages — slowing them down or speeding them up — using <keyword id="6357126" type="DEFINITION" weightage="60" keywordseo="Monetary-Policy">monetary policy</keyword> and fiscal policy. Fiscal policy is carried out by the government; monetary policy is carried out by a nation's central bank.</p><p>For example, when an economy is in a contraction, particularly a recession, governments use expansionary fiscal policy, which consists of increasing expenditures on projects or cutting taxes. These moves provide increased levels of disposable income that consumers can spend, which in turn stimulates economic growth. </p><p>Similarly, a central bank — like the Federal Reserve in the US — will use an expansionary monetary policy to end a contractionary period by reducing interest rates, which makes borrowing money cheaper, thus stimulating spending, and eventually the economy.</p><p>If an economy is growing too fast, governments will employ a contractionary fiscal policy, which involves cutting spending and increasing taxes. This reduces the amount of disposable income to spend, slowing things down. To employ a contractionary monetary policy, a central bank will increase interest rates, making borrowing more expensive and therefore spending money less attractive.</p><h2><strong>The financial takeaway</strong></h2><p>Even though they seem like something that only affects "the economy," business cycles have plenty of real-world implications for individuals. Recognizing the current cycle can influence people and their lifestyle decisions.</p><p>For example, if we're in a contraction phase, finding work often becomes more difficult. Individuals may take up less-than-ideal jobs just to ensure they are making an income, and hope to find better positions once the economy improves. </p><p>It may also influence spending and making long-term plans. "You're going to have to be cautious in terms of using your savings now because you may need them later," says Reinhart.</p><p>Understanding the business cycle is also crucial for investors. Knowing which assets — especially stocks — perform well in the different phases of a business cycle can help an investor avoid certain risks and even grow the value of their portfolio in a contractionary phase.</p><p>Granted, individuals can't do much on their own to affect a business cycle, and weathering its down phases can be tough. Still, it might help you sleep better at night knowing "it's a cycle and that we won't be there forever," says Reinhart. "Understanding the business cycle gives you at least a reassurance that there are a rebound and recovery to follow." </p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing Reference</a>:</h2><ul><li><h3><a href="https://www.businessinsider.com/recession-vs-depression" target="_blank" rel="noopener">Depressions and recessions differ in their severity, duration, and overall impact. Here's what you need to know</a></h3></li><li><h3><a href="https://www.businessinsider.com/us-q2-gdp-record-decline-coronavirus-pandemic-recession-lockdowns-economy-2020-7" target="_blank" rel="noopener">US GDP plunged by a record 33% annual rate in the 2nd quarter as coronavirus lockdowns rage</a></h3></li><li><h3><a href="https://www.businessinsider.com/personal-finance/how-to-protect-money-from-a-recession" target="_blank" rel="noopener">2 steps to take to protect your money from a recession, according to a financial expert and bestselling author</a></h3></li><li><h3><a href="https://www.businessinsider.com/stock-market-crash-1929-depression-similarities-slow-recovery-ahead-socgen-2020-6" target="_blank" rel="noopener">The recent stock-market crash and the Great Depression of 1929 share an unnerving similarity that suggests the recovery will be more painful than many investors expect</a></h3></li><li><h3><a href="https://www.businessinsider.com/modern-monetary-theory-mmt-explained-aoc-2019-3" target="_blank" rel="noopener">MMT: Here's a plain-English guide to 'Modern Monetary Theory' and why it's interesting</a></h3></li></ul>

Business cycles chart the ups and downs of an economy, and understanding them can lead to better financial decisions

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MakeMyTrip fires 350 employees as company looks for ways to sustain during the Covid19 pandemic

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