Saturday, 28 September 2013

Ireland's Economic Comeback




On Wednesday, the International Monetary Fund (IMF) released a billion dollars of financial help to Ireland, as the country complied with the requirements set up in its 2010 bailout plan. The plan, which saved Ireland from bankruptcy after it suffered a massive banking crisis starting 2008, is reaching its end, as Ireland is getting ready to start issuing sovereign debt again in December. However, the country has to reach a minimum annual growth of 2% for its debt to become sustainable.

Ireland is now out of its second recession in five years with a 0.4% second quarter expansion. This positive data, however, falls short of the optimistic 1.3% growth over the entire year predicted by the Irish government. Irish exports have grown by 4.3% over the same period, while household consumption grew by 0.7%.

The IMF decision came almost one week after other good news for Ireland: on Friday, September 20, Moody's announced positive forecasts on Ireland's sovereign debt, which it now judges as "stable" instead of "negative", and now considers that the country's debt-ratio should become sustainable again. These forecasts, however, highly depend on Ireland's ability to maintain its austere economic policies and exportation rates. Before this announcement was made, Moody's was the only rating agency left to consider Ireland's debt as a speculative and unstable investment, as S&P and Fitch had positive and stable perspectives on Ireland's ratings. The change in the agencies' opinions seems to indicate that Ireland is now considered as financially sound, which should greatly impact the rate at which it will issue its new December bonds.


Ireland is reaching the end of its bailout program and seems to have found the path to economic stability. As such, it is a concrete example of what could happen to other bailed out European countries like Greece and Cyprus in the future. Moreover, this new Irish growth will have a positive impact on its partner economies in the European Union, which could in turn help other bailed-out countries.


- Mickael R'bibo

Friday, 27 September 2013

Telangana: To be or not to be?


Telangana supporters gather to advocate for the region's statehood.

The concept of statehood has always been a contentious debate in India. It’s recently gotten international press as Telangana, a region of Andhra Pradesh, is fighting a stormy battle for statehood.

When India gained independence from the British in 1947, the modern-day Indian map began to emerge. States were created and borders were drawn. The map continued to take shape in 1956 with the States Reorganization Act, a piece of legislation resulting in the single largest change in state borders since India’s independence. The act called for state boundaries based on linguistic differences.  So, Karnataka was created for Kannada speakers, Kerala was created for Malayalam speakers, Gujarat for Gujarati speakers, and so on. Modern day Andhra Pradesh was created for Telugu speakers. 

It seems despite their linguistic alignment with the other regions of Andhra Pradesh, the people of Telangana were unhappy from the start. Movements for their secession have been arising for decades, with major uprisings occurring in 1969, 1972 and 2009. Over the past few months the Telangana movement has gained new momentum, and despite strong opposition from Andhra Pradesh, it seems now that it will indeed become a state.
Telangana protests over the last few months have clashed with police.

Telangana is the largest of Andhra Pradesh’s three regions, covering 40% of its total area, holding 40% of its population, and making 76% of its revenues. The state capital, Hyderabad, lies at its core. Hyderabad is one of India’s most important cities from an economic standpoint.  As the statehood plan stands now, Hyderabad will serve as the capital of both Andhra Pradesh and Telangana for the next ten years.

If Telangana does become a state, it will be the first state in India created due to dissatisfaction with the political community. The people of Telangana feel they have been suffering from political neglect in the state and in the nation.  They feel their representation in the national government over the last 50 years has been unfair, as most of the state’s chief ministers (equivalent to a state governor in the US) have come from other regions. Chief ministers from Telangana have served for 10.5 years, while chief ministers from the rest of Andhra Pradesh have served for more than 40 years. As a result the people of the region feel ignored and exploited by the national government. They feel they are on the state’s peripheral agenda, leaving Telangana a backward region. Some of the injustices they decry include poor water distribution, budget allocations, and government job allotments.  Water distribution in particular, is a major concern for the people of Telangana. Not only have there been issues with receiving a reliable supply of clean drinking water, but also there have been issues with receiving water for irrigation. A dependable irrigation system is crucial to the livelihood of the Telangana people, as agriculture is one of the region’s main sources of revenue. Also, due to a recently constructed dam, some mineral rich sections of Telangana are not receiving an adequate water supply to sustain their mining communities. The dam has redirected the river’s water to other regions of the state, away from Telangana. In addition to the water injustices, the Telangana people feel that despite the revenues they contribute to the state, they are not seeing sufficient returns in terms of government development projects and government jobs.

Critics have called the recent national attention to the issue nothing more than a “short-term electoral maneuver.” The Indian national elections will take place in May of 2014, and as candidates are being selected it is no secret that they are seeking votes in the region. Congress, the current leading national party, says Telangana will be created before the next election.

The fight for the state of Telangana brings to light many issues. If the federal government grants Telangana statehood this may lead to other marginalized communities vying for statehood too. The people who live along the slender neck of West Bengal, in the region of Darjeeling, have been struggling for a state called Gorkhaland for decades. Like the people of Telangana, these people too feel ignored by their state’s government.  Will they too receive the status of statehood? Why Telangana instead of Gorkhaland? This will become a particularly controversial issue, when the national election passes and the typical insouciance of the national government returns. Other issues will arise beyond the dissatisfaction of other marginalized Indian communities. How will Telangana continue to share its state capital with Andhra Pradesh? What happens when their ten-year agreement expires? What are the other repercussions in store for Andhra Pradesh after the split is made? Is Telangana prepared for the administrative responsibilities that are required to run a state? Many questions still need to be answered on both India’s and Telangana’s preparedness for the new state. It is not something to be rushed, simply to meet the deadline set by the national election.


Written by: Lynn Bernabei

Beats Takes the Next Big Step


Top private equity firm, Carlyle Group, gave Beats Electronics $500 million Friday valuing the company at $1 billion. In exchange for growth capital, it will be taking two of six positions on the high end sounds and audio tech company's board.

The money will be used to buy back HTC's final twenty five percent stake in the company, ending a partnership that did not go quite as planned. The Taiwanese smart phone company bought half of Beats three years ago for $309 million dollars, and used the technology in its smart phones. As its cell phone sales have since far lagged behind Samsung, it has moved to sell its holdings in its partner, in order to focus on its most important business segment.


Beats has started to expand into the speaker business, revealing a new line of pill speakers marketed in notable pop songs "Blurred Lines" by Robin Thicke and "We Can't Stop" by Miley Cyrus. It has already captured sixty four percent of the premium headphone market, and has put its technology into Hewlett-Packard's computers. On track to made $1.2 billion in revenue this year, the infusion of capital will allow the company to take the next step in separating itself from its competitors.


Beats is banking on the continued growth of social media use and the smart phone industry. As it looks to become the innovative leader of audio accessories, it believes that the growth in tablet and digital audio use will allow its own growth to continue.


The Caryle Group's investment shows the trust it has in the financial strength, brand, and growth prospects of Beats Electronics. The next wave of Beats premium headphones should hit the market with a splash.


Rishi Chheda

Thursday, 26 September 2013

Shanghai Free-Trade Zone Entices Foreigners, Raises Land Prices


China's official news agency, Xinhua, reported on Tuesday that Shanghai would open up its planned Free-Trade Zone on September 29. The roughly 29 square kilometer area in Shanghai will be exempt from trade barriers and censorship rules that affect all parts of China outside of its Special Economic Zones. The ridding of mandated customs inspections of all imports and exports aims to boost trade volume and attract foreign investment in China's most populous city.

The most attention-grabbing quality of the new Free-Trade Zone is the lifting of internet censorship bans on Facebook, Twitter, and The New York Times, allowing unrestricted access to these sites only within the small zone in the city. The new policy aims to attract foreign firms to spur local banking, insurance, shipping, and healthcare industries, among others. “In order to welcome foreign companies to invest and to let foreigners live and work happily in the free-trade zone, we must think about how we can make them feel like at home,” stated an anonymous Chinese government official.

One consequence of this announcement is a surge in home prices around the Free-Trade Zone. Real estate prices in Gaoqiao, a residential area near the new zone, jumped as sales soared 50% in just two weeks at the beginning of September. Since the original plans for the Free-Trade Zone were announced earlier in the year, real estate prices had already risen roughly 8% in the area.

Shanghai’s move to attract foreign firms is seen as a modern application of Deng Xiaoping’s principle of “Reforming and Opening Up” which showed much success in cities like Shenzhen. The entry of foreign firm into Shanghai’s local market will spur competition and innovation in the 19 industries the zone plans to deregulate, and it will lay essential groundwork for further deregulation of trade and free exchange of the Yuan in China.

-Mitch Lagrasta

Netflix Expanding

Netflix recently announced a second deal with a cable company to bring its online streaming service to cable. The deal with Swedish company Com Hem would add a potential 600,000 customers to its service. This comes after Virgin Media struck a similar deal in the U.K to bring Netflix to at least 1.7 million of its customers.

The two cable providers would begin offering the service to subscribers of their respective TiVo DVR services.

While this deal may seem like big news for the two companies, Netflix and Com Hem's DVR service must have a balance to properly coexist. This is because any DVR system can undercut the streaming service provided by Netflix or vice versa. For example, if I wanted to watch an episode of Law and Order SVU, I could potentially look it up on Netflix or just have TiVo record all SVU broadcasts onto the DVR hard-drive. The TiVo service that Com Hem provides can be anywhere from twice as expensive to seven times as expensive as Netflix, and with Netflix right on the system consumers may start to think: is this service really worth it when I can just keep Netflix by itself?

Although there is a possibility of either service poaching customers from the other, both sides of the deal have inherent strengths. Com Hem's DVR service will allow viewers to stay up to date with current shows that Netflix won't have for several months. On the flip-side, Netflix has exclusive content, such as House of Cards, that consumers have interest in but may not have access to. Overall, this Netflix deal with Com Hem may just be a start to the streaming company's plans of expansion. Consider this a test run before any U.S cable providers are approached.

-Aureen Sarker (Photo Credit: Netflix)

Tuesday, 24 September 2013

Obama pushes for diplomacy on Iran's nuclear program


President Obama and Iranian President Hassan Rouhani both openly stated their support for a new diplomatic effort regarding Iran's nuclear program. Obama, addressing the UN General Assembly on Tuesday, stated that there was "basis for a meaningful agreement." In recent weeks, Rouhani, who was elected in June, has suggested that he is open to developing a program in which Iran is allowed to further their nuclear energy program but prevents them from building a weapon, claiming that a nuclear weapon program would "contradict our fundamental religious and ethical convictions."

Obama said that Secretary of State John Kerry was working with the Iranian government to resolve the negotiations about Iran's nuclear program. In his statement to the UN General Assembly, he stated that success in the negotiations would be a "major step in a long road to a difficult relationship, one based on mutual interests and mutual respect," adding that "the roadblocks may prove too great but I firmly believe the diplomatic path must be tested."

Obama has suggested in the past that if Iran were to develop nuclear weapons, the United States would not be afraid to take military action against Iran. Rouhani spoke with fervor about several components of American policy as well, stating his frustration with previous sanctions on the Iranian economy and the use of drones to kill alleged terrorists.

Nonetheless, the push for diplomacy on the issue marks significant progress for both the US and Iran. Speculation has begun that Obama and Rouhani will be able to the resolve the issue quicker than expected, despite the tense relationship between the two countries. The resolution to this issue would be a major step in the direction of diffusing the tension and repairing the relationship.

-Abhishek Parekh

Monday, 23 September 2013

Bye-Bye Blackberry



Blackberry, Blackberry, Blackberry. It looks like it's time for you to take a giant step away from the highly competitive smartphone market. Anyone remember when these things were the cool phone to have? That lasted all of 6 months.

4 or 5 years ago when smartphones were in their early beginnings and people had to deal with the horrible data plans that offered sub-3G speeds, Blackberrys were a viable option. So viable that the market loved their stock, and it enjoyed levels above $70/share. In 2011, it had a pretty solid run too since companies worldwide adopted the Blackberry as a cheap and efficient work phone for employees. But now with the Samsung Galaxy S4 and Iphone 5, 5s, and 5c dominating the market, there's no room for the tiny screen and tiny keys that Blackberry offers. Their new smartphones haven't been cutting it. Blackberry failed to penetrate the consumer market, and that's the market where the money lies.

Just today, Blackberry was finally acquired by another company, Fairfax Financial Holdings. Blackberry received about $4.7 billion dollars, valuing them at around $9 per share. If Blackberry really thinks that now they are only worth 9 dollars a share, maybe Fairfax is making a mistake in acquiring them. Unless Fairfax completely changes Blackberry and starts producing smart"er"phones, it's near impossible to find a possible strategy that will work in the long run. Another major challenge for Blackberry is their lack of an App Store. Apps have improved everyday life and are a major key to creating a great phone. Since large amounts of people have already switched to Androids and Iphones, it will be hard to find developers to create apps for the Blackberry market.

In my opinion, it's time to say good-bye to our dear friend. Maybe offices worldwide can keep Blackberry afloat as a small company, but as consumers, there seems to be little that Blackberry can offer us.

-- Kunal Agrawal