Sunday, 30 September 2012

HEADING STUDENTS IN THE RIGHT DIRECTION

I talk below about my first test of the current semester.   If you teach Financial Accounting and would like to see a copy of that test, drop me an email at Jhoyle@richmond.edu.
***

I think the most important time during any semester is immediately after the first test. Until that time, the students have done what they thought you wanted them to do (or what they thought they could get away with). The first test gives them a chance to judge how well their class strategy has worked. If they need to make corrections in that strategy, this is the time to do it. You have their undivided attention, especially if they did not do as well as they would have liked.   They are young -- believe it or not, they usually appreciate some serious guidance.

You need to understand that most students are very used to doing X amount of work and getting Y grade. Many are well satisfied with that approach and that result. Others are not satisfied but have no clue what adjustments they need to make. Our school systems produce many students who are not very good at being what I call "learning students." For many students, their entire learning strategy consists of reading the chapter and marking key words with a highlighter.  That's a long way from developing critical thinking skills.

So, my first test is always demanding but not impossible (I’m not sure what giving an impossible test might accomplish). I try to cover a lot of different things we have covered during the weeks we have been together. If you have read my essay on testing circles, you know that I try to give questions slightly outside of the circle of information that we have covered in class – questions they should be able to figure out if they have understood the material well enough.

Some students do extremely well on the first test whereas others struggle. It’s at that moment that I want to push them all in the direction that I want them to go. First, I mail out an answer sheet which can help them gauge how they have done – most can look at that answer sheet for a few minutes and have a general idea whether they are pleased. I wait a few hours and then send them another email. In this second email, I want to tell them two things: (1) if you are not satisfied with how well you were prepared for this first test, here are some concrete ideas to try and (2) you can still do well in this class but you need to start making some improvements.   I do not want to leave them feeling lost and hopeless.

I’m not out to punish them.
I’m not out to make them feel guilty.
I just want them to do the work that is necessary to learn the material. And, I don’t want them to lose their confidence because that is the first step in a spiral downwards.
I don’t try to be a cheerleader who just gives them rah rah encouragement. I want them to know that they can still do well and show them the kinds of actions they can take in my class to get the grade they really want.

Here’s the email that I sent out to my Financial Accounting class yesterday.

**

To: Accounting 201 Students

From: JH

I am working on your tests this morning. I might have them done by Monday but more than likely it will be Wednesday. They have looked just like every other test I’ve ever given in 201: They range from the brilliant to the not quite so brilliant. On some questions, I am thrilled by your ability to work through a complicated issue. You looked like geniuses. On other questions, I wanted to kick my cat because a simple concept seemed to elude you. But, in the heat of a test, it is easy to have ups and downs.

The primary purpose of a first test is help you gauge how you are doing. If you are satisfied with your grade, then I would keep on keeping on. Don’t get lazy and make any changes.

However, if you are not happy with your first grade, I have one piece of fatherly advice. In most cases, the way to raise a grade is to invest more time. Not more time the night before the test but more time each day. If you are spending 30 minutes a day, maybe you should spend 60 minutes. If you are spending 90 minutes a day, maybe you should spend 150. To quote Miss Piggy of the Muppets: “more is never enough.”

How could you spend more time? Here’s a check list – check off the ones that you are already doing. The ones you are not doing, consider starting. I read an article recently about LeBron James who is usually assumed to be the best basketball player in the world. The article basically talked about how hard he worked to get better. That’s what I want/need from you.

--Did you watch the opening video whenever we started a new chapter? I didn’t always assign the videos but they are always there. They help you know what to watch for in the chapter. They give you an outline structure before you read the first word.

--As you read the chapter, did you stop and do every single “test yourself” problem? That’s a key way to make sure you are catching on to what the reading is saying. And, if you missed the “test yourself” problem, did you keep working on the answer until you understood it? Never walk away without understanding.

--Did you spend some serious time getting ready for each class by working on each new sheet? Students often get good at “kinda knowing” material without ever “really knowing.” That “kinda knowing” often becomes way too obvious on a test.

--If there was a question on the daily assignment sheet that you couldn’t figure out, did you come by during my office hours to chat or send me an email lesson? I talk with a lot of students but clearly not all.

--Have you been gathering for 30 minutes before each class in order to have a serious conversation about the material on the sheets? Have you been using that as a way to prepare or as a way to check your preparation?

--After class (almost immediately after class) did you go back through the material to organize it to make sure you really understood it all? That organization after coverage can be the most important part of learning.

--When I sent out a problem by email, did you work it right then and check your answer?

--When I posted the answers to the end of chapter true-false and multiple-choice questions, did you work them right then and check your answer and not quit until you understood each answer?

--Did you watch the video at the end of the chapter where I list out the 5 most important things in the chapter? It is a great way to review because I am pointing directly at what I thought was important.

--Did you go over last semester’s test until you could work it backwards and forwards and upside down?

I realize that most of you are used to “one-hour” courses – they require about an hour a week in your leisure outside of class and you learn a little that you forget over Christmas. This is not a one-hour course and I don’t expect you to ever forget what you learn. Yes, you may have to party a little less. Yes, you may have less time for television or Facebook. Yes, you may have less time for computer games. Yes, you may have to get up a little earlier to study.

But you CAN do this. I believe that from the bottom of my heart. If you don’t have a check by everything on the above checklist, then there is clearly more that you can do.

The first test is merely 21.7 percent of your grade. Pick the grade you want on the second test RIGHT NOW and promise yourself that you will do whatever it takes to make that grade.


Wednesday, 26 September 2012

The Losers and Losers of the NFL’s Referee Strike


 

In past weeks, the replacement refs in the NFL have been a popular topic of jokes and Facebook memes. Some fans think these refs are so bad that they don’t even want to watch football anymore because they are destroying the integrity and spirit of a good, old-fashioned game of football. Monday night’s Packers vs. Seahawks game was the epitome of all that is wrong with the replacement refs. Missed penalties, conflicting calls, and terrible spots have been seen throughout the last three weeks and especially in this last game. The last hail-mary play in that game has sparked so much controversy throughout the sports world; this might give the NFL the push they need to re-negotiate the terms of their deal with referees.

For those of you who don’t know what has been going on with the NFL referee situation, let me recap. About a month ago, the NFL wanted to change how NFL referees received retirement benefits. They wanted to switch from a defined pension plan, which is a fixed, stable source of retirement revenue to a defined contribution plan, which is a fluctuating source of revenue based on future investment earnings after someone retires. The referees are obviously unhappy with this because they would much rather prefer a retirement plan that has less risk and fluctuation. Thus, they went on strike to prove a point that they are necessary to run a game of football, and they should be treated with more respect.

I think they proved their point. Many fans are threatening to stop watching NFL because the games are becoming more about the farcical nature of replacement refs rather than the sport. Many articles are commenting on the inefficiencies caused to everyone by these replacement refs. For example, InvestorPlace quoted that the NFL is projected to generate $9.5 billion in revenue this year. Not only will the NFL lose fans due to the poor performance of these amateur referees, they might lose their sponsorships as well. The NFL has enormous partnerships with CBS, FOX, NBC, and Nike. The potential value of losing these partnerships is a lot greater than the $18 million they owe the refs in salaries and the extra $4 million it would cost them to settle the disputes. The NFL, as an organization, has the obligation to maximize the value to their stakeholders. By not successfully negotiating the deal to bring back professional referees, the NFL is compromising their stakeholder value, and they may lose even more fans and potentially even their relationships with other companies. In the end, this is a lose-lose situation and the NFL should just give in to the demands of the referees and give them what they want so they can appease their stakeholders.

-By Yashwant Chunduru

The controversial hail-mary play referred to earlier in the post: http://www.youtube.com/watch?v=wHsUc2zm0KI.

Tuesday, 25 September 2012

Economic side effects of Senkaku Island dispute



Japan’s claim of Senkaku Island property right has brought itself an enormous wave of anti-Japanese protests in China. The Senkaku dispute not only brings about political conflicts and military tension, but also, most importantly economic downtown, as China is Japan’s top two-way trade partner since its two-way tradegrows to $266.4 billion dollar in 2008. Japanese automobiles, electronic products, animated cartoons and video games are all popular Chinese imports. Japanese economy has always been relying on Chinese markets and the number one victim of the Senkaku dispute would be Japanese exporters. Major Japanese exporters such as Honda, Toyota, Sharp, Sony, and Panasonic are all facing dramatic sales and revenues decrease, and huge decline in stock price. Sony and Panasonic are even considering industrial transition and selling its LCD business to the Chinese and Korean producers. Losing its biggest importing country, Japanese export industry devastates in long-term even though Japanese politicians cannot feel this pain.

      The anti-Japanese protest broke out on the 19th of August, starting from Shenzhen, Xi’an, Jinan and Chengdu. The protests spread to other big cities such as Zhengzhou, Shanghai and Beijing, etc. when the Japanese government continues to assert its control of Senkaku Island by bidding it for 2.5billion RMB. This “extremely unfriendly move” intensifies the relationship between the Chinese and Japanese government. To fight against Japan’s unfriendly behaviors and under the pressure of countless protestors, the Chinese government increases its import tariffs and largely raises its Japanese product quality standard. Although China itself will be harmed through these trade barriers, as consumers in China lose their consumption in cheap and differentiated Japanese products, and domestic Chinese producers take over the market of imports and produces in a high margin cost, which is not economically efficient to the nation as a whole. However, national pride and defense, rather than economic efficiency is what China is pursuing in the Senkaku island dispute. In order to exert pressure on Japanese government economically, the most efficient way to achieve this noneconomic goal is through placing high trade barriers while receiving more tax revenue.
Ruijia Tan.

Sunday, 23 September 2012

QE3- Its Mechanisms & Effectiveness


Quantative Easing is always a hot topic in the news.  How much do you know about the recent QE3 announced by the Federal Reserve?  This blog aims at discussing the operations of quantitative easing and the impacts of QE3 on various aspects.

The Fed launched a new bond-buying program on September 13.  The image below by Wall Street Journal gives a very clear illustration on how the Fed expects to boost the economy by buying more mortgage-backed securities and Treasurys.



What's Distinguishes QE3 from the previous QE1 and QE2?
The biggest differentiation would be the "open-endedness" that the Fed has promised.  Under the QE3 program, the Fed would buy $40 billion mortgage-backed securities each month in an open-ended effort until there is a sustained improvement in the job market.  Therefore, on top of the $45 billion a month the Fed is already spending on Operation Twist through the rest of this year, the Fed is spending $85 billion per month to boost the economy.  Moreover, the Fed also said that the federal funds rate would stay near zero "at least through mid-2015," in order to "support continued progress toward maximum employment and price stability."  However, another open-ended question here concerns the targets for jobless rate or high inflation.


Effectiveness of QE3
While it is a new move for the Fed to develop an open-ended quantitative policy, I am concerned with the actual impact that this round of QE3 could make on the economy.  I believe the Fed is taking more risk than the opportunity.  When we look at the economy and try to figure out the factor that is holding back consumption and leading high unemployment, it does not appear that more easing would change the situation.  Indeed, lower interest rates, cheaper money can promote borrowing, but I don't see how this solves the problem.  



Look at the diagram above.  Unemployment and inflation rise to the original level after our previous quantitative easing programs.  Remember, every new QE program signals the Fed's admission to the failure of achieving goals' of the previous QE program.  Yes we have QE1, QE2, and Operation Twist, but unemployment is still above 8%.  While macroeconomic factors such as European Debt Crisis might have affected the US recovery, I believe the Fed is bearing more inflation risk than the possible return- lower unemployment.


~Sophie Tam

THREE WEEKS DOWN

If you have read this blog for long, you must know that I put considerable stress on communicating with my students, often by email. I believe open and honest communication is a key for all successful relationships. These communications give you a chance to guide your students toward the outcomes that you want. They allow you to motivate the students, to keep pushing them forward (“I know this seems hard but you are smart enough to do these problems with a bit of work”). They provide a chance for positive feedback – “the class was especially good today” is never a bad acknowledgement – one that students often never hear. They enable you to correct actions that you don’t like (“not very many of you had worked problem 5 for today; I’ll expect a better effort at the next class”). Communications help the teacher to prepare the students for upcoming material – “we are really going to stress the computation of interest expense at our next class so make absolutely sure you’ve studied pages 456-458 in the textbook.”

Here is an email that I sent out to my students in one of my classes after the third week of the semester. Notice how many things I was trying to accomplish with this one communication. That’s a good test question for you – how many things am I trying to do here?

“To My Students

“Okay, we have finished our first 3 weeks. Our first test is a bit over 2 weeks away (October 1). Not a bad time to stop and evaluate how things are progressing.

“How are you doing? I’m constantly trying to assess how each class is doing. I think about that in general terms – how is the class as a whole doing? I also think about that in individual terms – how are you (yes, you) doing? I only have 23 students in intermediate accounting this semester so I can do some serious thinking about you individually. (A close friend of mine teaches classes of 400-500 at another school – he has no way to keep personal track of each student. I do.)

“In many ways, I’m really interested in how quickly you catch on to what I’m doing so you can get on board with the process. In any intermediate accounting course, I always have a few students who assume it’s still a high school class and treat it that way. I’m glad to say, though, that most of you are beginning to pick up the system. There are many moments when I'm quite pleased with you especially when we get to a point where we start seeing how things in accounting fit together.

“How do I view this class?

--I expect you to prepare very well on a consistent basis. I do my half of the work every day; I expect you to do your half of the work. You have daily questions from me. You have a huge textbook. You have last spring’s test along with answers. You can easily make use of 60-90 minutes between each class. I often say TIME equals POINTS and I believe that is true. The best thing you can do to do better in this class is put in more time. "How can I make use of more time?" is never a bad question to ask yourself. Too many students ask “how quickly can I get finished?”

--Then, you come to class and I throw bizarre questions at you – often different than the ones I have given you to prepare. What I am trying to do is teach you how to take what you’ve prepared and use it (on the spot) to figure out something else. I am teaching you how to answer questions that you haven’t seen before by a quick analysis and a genuine understanding of what’s gone before.

--Then, you go back to the library or your dorm and spend 30-40 minutes assimilating what you’ve learned so that you can use it in answering future weird questions.

--I think all of that is a skill/talent worth developing. That’s something you can use in the real world regardless of your major.

--The four keys to this process as I see it: (1) preparation and (2) “figure it out” and (3) assimilate for future use and (4) consistency.

“When all of the above goes well, the class should be fun. You should look forward to coming to class and be surprised and disappointed that our 50 minutes together has flown by. I know things are going well when people tell me ‘I wish all my classes were this interesting.’

“How do some students seem to view this class?

--These students believe that preparation is a waste of time because the teacher (me) is going to tell them what they need to know in class. Their preparation is, at best, a half-hearted affair.

--In class, they pray they won’t get called on. They write down what anyone and everyone says with the assumption that they’ll memorize it all the night before the test. All real learning is deferred and replaced by a cram system.

--The problem is that when they get to the test and I throw a bizarre question at them, it doesn’t match up with the memorized material in their head and they haven’t determined how to analyze and figure out a reasonable answer.

--This system only works if the teacher is going to ask you to repeat back what you have been told. I won’t do that.

“In addition, that type of class is just flat boring.

“So far, at least in general, I’m not unhappy. Not at all. Oh, I throw out questions occasionally and feel we should get better answers but that always happens. It’s hard to understand gravel or gift cards until you’ve worked through it for a while. Or, I ask something directly from a previous class and get a “deer in the headlights look” that says “I haven’t thought about this one second since we last discussed it.” But, you are getting better each day and I’m not looking for perfection. We've made 3 weeks of progress in 3 weeks.

"That’s sufficient for me.

“I’m just looking for preparation and the willingness to try to figure things out. (A genuine curiosity is a big help in my class and in life.)

“Come see me if you need help.

“And, remember, a good grade on the first test is nice but it isn’t a guarantee of great things to come. And, a bad grade on the first test is not the end of the world. It’s just a first test, a way to gauge how you are doing in this somewhat unusual class.

“If nothing else, enjoy the process.”

Saturday, 22 September 2012

GM Invests in China



Already a large player China, the world'd largest auto market, GM made another leap to secure their leading market share. Along with its joint venture partners SAIC Motors, GM spent $252.5 million to build the largest proving ground in the country.

Essentially a large test track for new cars, the proving ground will make introducing and improving vehicles made for the Chinese market that much easier. Without having to ship cars to South Korea, the United States, or any other tracks, GM will save both time and money when it comes to the creation, inspection, and final sale of the car. GM China President Kevin Wale stated, "When we look forward, our volumes are going to increase significantly and to win in the market place you have to introduce more products and introduce them quicker and better than the competition". This investment will allow them to continue building on the leading 14% market share they held last year. This move clearly shows that GM wants to control the Chinese market and prevent any other competitors from breaking the barrier.

 While the Chinese auto market is currently slowing, GM is looking at their long-term prospects in a market projected to move from $12 million to $30 million in sales by the end of the decade. The building of this track is a deep seed in China that will make it much more efficient for GM to operate.

GM’s initiative to develop vehicles faster comes with understanding the Chinese culture. "Speed is everything in China," Wale states. "The market moves quickly and you've got to adapt quickly." GM is clearly showing its ability and motive to act quickly and take a more commanding lead in the Chinese Market. While smaller cars are the bulk of sales for GM, the growth of wealth in China will allow for new SUV and luxury cars to be developed.

-Rishi Chheda

Friday, 21 September 2012

A bad bite of Apple?


Has any of your friends got a new iphone 5? Does s/he use maps on the cell phones a lot? If so, you must be hearing them complaining all days about their new babies, more specifically, about the map app.

It seems that Apple's decision to replace Google Maps by its own product has now come to such an embarassment so quickly. The two Silicon Valley giants were once good alliances until Apple realized Google's android phone as a dangerous rival for iphone. From then, Apple started to cut down or even cut off their dependence on Google. Apple tried to find the alternatives for each popular Google apps in their iTunes store. They no longer see each other as a partner.

But now the feedbacks from thousands of consumers proved Apple's failure. It's just too anxious to escape from Google's control. Almost all new iphone users find the new map system as a joke because mislabeled landmarks, missing roads and streets and misplacement of lots of famous constructions. In a word, it would never bring you to the right place. And this is not only in America, consumers in Japanese and Hong Kong find these problems as well, along with language problems since some locations in Japan are only described in Korean.

Although Apple is responding actively and promise to improve maps as soon as possible, most of the consumers still begin to demand adding back of Google Map. Perhaps the new map system is not a bad trial , but Apple should be more patient, patient enough until all its tuition fee has been paid. Google has developed its map system for almost 10 years. No one is expecting Apple to build another Rome in one day.

--Oscar Zhang

Thursday, 20 September 2012

Feuding Flares in Japan and China


    The fires of a long-standing territorial dispute between Japan and China have been rekindling as multiple anti-Japanese protests have taken place recently in China.  The territory under question is a few small uninhabited islands in the East China Sea.  China claims long-standing historical ties to the territory.  However, Japan held jurisdiction over the islands starting in 1895 and lasted until 1945 when the United States took occupation of the islands.  The United States gave the islands back to Japan in 1972.  China has never been accepting of this Japanese control and still claims the islands.  Just this past month, the Japanese government decided to purchase the islands from the private Japanese citizens who owned them.  This purchase has been the direct cause of the recent anti-Japanese protests in China. 
    As of the writing of this article, the protests have begun to die down.  Protesters were seen destroying Japanese goods, cars, and even demanding economic sanctions on Japan.  Besides the territory in question, the protests seem to have some clear political causes as well.  There is a leadership transition underway in China and no leader wants to appear submissive to Japan. 
    There has been a near media frenzy in covering this story.  Authors from the New York Times to The Economist have belabored how important it is that China and Japan continue to trade, and the drastic consequences that would result if these countries came to war.  However, despite the media attention for the protests, there are no signs that these protests will lead to any major consequences.  The islands in question are described as natural gas rich, but the resources in question certainly are not enough to make a difference for China.  More importantly, the Chinese government has more than enough problems at home to keep it occupied.  Why would it need to acquire a few islands? 
    While anti-Japanese protests in China might seem to have the potential for dire consequences, it is important to look at the situation in practical terms.  These protests have a political flavor, but are very unlikely to gain traction.  The potential for war and economic sanctions from these protests seems almost nonexistent. 

-Kyle Cameron

Wednesday, 19 September 2012

Trimming the Fat

The New PS3 (Photo Credit: Sony)
After six years on the market and one redesign, Sony has once again decided to release a new version of its Playstation 3 video game console, making the latest model half the size of the original behemoth. Sony has also decided to up the configurations to 250GB and 500GB models while also aggressively pricing the configurations at $269 and $299 in North America, respectively. This move comes in anticipation of Nintendo's Wii U console, which will have a price point of $300-$350.

Will this redesign save Sony's lagging entertainment division? While sales of the PS3 remain steady, they are nowhere near the level of its predecessor, the Playstation 2. The slimming down of the PS3 will be a good thing for Sony and for consumers in general; however, it displays a glaring problem in Sony's corporate business model at large. For several years, the PS3 was sold at a loss with the hopes of eventually trimming it down to turn a profit. Only "eventually" happened three years later. When looking at the corporation overall, Sony has had its largest consecutive losses in the last four years, and with each one, corporate cutbacks are promised. Management has cut over 30,000 jobs and shuttered 11 factories in the past 5 years, hoping to reduce costs to make an operating profit. Yet Sony still lags behind its competitors in practically all of the fields it once dominated: laptops and music players to Apple, phones to both Apple and Samsung, and TVs to Samsung and LG, among many others. Ultimately, the problem with Sony is believing that its core business model will work given enough time. This has led to a lack of innovation with Sony simply waiting it out until their production processes gradually become cheaper. But underneath Sony's fat are just skin and bone, no muscle to support the frame.

-Aureen Sarker

Sunday, 16 September 2012

Financial Fair Play

With the new Premier League, La Liga, Bundesliga and Serie A campaigns several weeks into their respective seasons, new trends for predicting the eventual winners of the world's biggest leagues are  becoming as popular as fantasy football tables. And all these trends point to one thing: spending brings silverware home. It took close to a $1 billion investment over the last couple years by Sheikh Mansour to bring home the Premier League trophy to Manchester City last season, and since then, clubs are retaliating. Chelsea has spent over $100 million on just two players this pre-season, and that seems like a bargain in comparison to the skill Eden Hazard brings to the pitch. All over the world, the clubs with the richest owners are spending, and spending big. Which is why Financial Fair Play cannot come soon enough. 

Already, we are seeing some effects of the rules that require teams to at least break even on spending, with the Europa League champions Atletico Madrid and over a dozen other teams not receiving their tournament earnings due to insolvency issues. But for the near-term, Financial Fair Play cannot definitively solve the problem. Barcelona and Real Madrid have the two highest pay-rolls in the world, but they also have individual tv rights that allow them to spend beyond any other club in La Liga; the result is an uncompetitive table that has two familiar names always at the top. The same is occurring in other markets, such as France where Paris Saint-Germain is outspending the competition, and the Premier League where Manchester City and Chelsea have taken the reigns in record transfer fees. Financial Fair Play will be good for the sport, and will only attract true lovers of the game to become owners, instead of businessmen that pile on debt to the clubs in the hopes of making a chunk of change back. The question now becomes: will these largest teams be too big to stop if they decide Financial Fair Play isn't for them? Rumors of discontent have led to the idea of a new "Super League" being formed by the world's largest teams. Soon enough, deficit spending by football teams may even topple the bills of governments. But what do football fans care, so long as they get to watch the beautiful game?

-Aureen Sarker (Photo Credit: Manchester City F.C

Saturday, 15 September 2012

How Staples's Failures Will Hurt Mitt Romney

A consortium of private equity firms including Bain Capital is said to be in preliminary talks to take-private struggling office supplies retailer, Staples. Though an official announcement has not been made, an offer could be announced by the end of this year. What does this mean for Mitt Romney?

As the Obama campaign continues to portray Mitt Romney's role at Bain Capital in a negative light, Mitt Romney has always retaliated with a list of companies he helped become successful. In almost all of his speeches regarding the recovery of the economy, he mentions how Bain Capital invested in Staples, created jobs, and caused it to become what it is today.

Based on recent news which has come out about Staples, it doesn't make sense for Mitt Romney to keep touting Staples as one of his major successes as it continues on a downward spiral. Just last month, Staples cut its profit and sales expectations citing a weak retail market. Staples shares have fallen 25% in the last six months, as it continues to face competition from Amazon and other online retailers. Even more, it may be delisted from the stock market and placed into the hands of private equity firms, which may or may not be able to turn it around.

Granted, an informed voter would realize that Staples was once one of the most successful retailers, and Mitt Romney's involvement played a huge role in making that happen. However, as long as Mitt Romney keeps showcasing his involvement with Staples at every campaign event, most voters will naturally connect Staples to Mitt Romney. Soon they will ask themselves, "If Staples fails after Romney's involvement, will the American economy fail too?"

This psychological correlation, though not completely rational, is inevitable. How can someone claim success by aligning himself with something that is failing?

-Smit Purohit



Thursday, 13 September 2012

The Impact of the Olympics on Local Economy


    

    According to the Office for National Statistics, the number of unemployment fell by 7,000 to 2.59 million in July and London contributes most to the number. We think of the Olympics as an opportunity for host country to build the country image, attract foreign visitors and boost the local economy. However, in a long-term perspective, the Olympic game brings limited economic benefits to the host country and the degree of its impact varies widely between countries.
     Countries hosting the Olympics spend millions of dollars building new sports facilities and infrastructures, which, in short-term, indeed brings increasing number of tourists. They visit the newly built stadium, pools and sports facilities. However, as the game ends, people move on to the next Olympic game. Unlike other infrastructures, these sports facilities and constructions will not be rebuilt into some productive and economic effective buildings that can be used for further investment. The long-term economic benefits gained from pure tourism are doubtful and limited. Further, by attracting tourists in the short-term, the host country creates for itself an image of crowd and congestion, which to some extent make it lose potential tourists. The tourism boom also increases the local hotel prices, restaurant prices, and leads to an inflation that prevents potential tourists from coming. These are the unavoidable negatives that host countries may confront both in short-terms and long-terms. 
     Yet, since Beijing has been authorized to host the 29th Olympic games, its average increase in GDP from 2002 to 2007 is 12.1% and according to statistical research, the Olympic game accounts for 1% increase each year. Beijing pays for its long-term impact: it invests 370 billion dollars, which is more than other industrialized countries such as America and Australia’s expenses. Unlike London, a country with a rooted image of well development and prosperity, China has been consistently finding opportunities to open its door of both trade and culture to the world since it joined the WTO in 2001. The Olympics stimulates the world’s interest in China, which is a new land with potential resources to invest and explore as it presents itself during the Olympics. Even though the unemployment rate in London drops greatly in short-term, the economy boost in London can hardly last as long as that in China for its saturated tourism market. 
Ruijia Tan.

Wednesday, 12 September 2012

Regulators hope to make whistles echo on Wall Street





Whether its laundering money for drug cartels, manipulating benchmarks or trading insider information, we have already seen a fair share of scandals and frauds this year. Our economic condition has made it crucial to provide increased transparency, due diligence and regulations to increase investor trust and to begin repairing the finance industry’s damaged reputation. So what measures are being taken to spot and prevent such acts of fraud from occurring again?

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into federal law by President Obama in 2010, has a section specifically dedicated to the “Whistleblower Program”. This program’s goal is to encourage employees and corporate insiders to report any fraud or wrongdoing they come across in their companies.

However, this law is nothing new- Sarbanes–Oxley Act of 2002 also had a “False Claims Act”, which provided employees financial incentives to report fraud to the SEC. However, the newer version has increased the scale of the financial incentive. The ‘whistleblower’, the individual that reports a wrongdoing, could receive an award that amounts to 10-30 percent of the penalties faced by the company accused (in excess of $1 million). So how many whistles have been blown?

Well, just last month the SEC reported the first whistleblower award of $50,000 to an individual that reported information that was critical in stopping a Ponzi scheme. And yesterday, a former UBS banker, Bradley Birkenfeld, received a whooping $104 million from the SEC for providing insider information regarding UBS's illegal practice of encouraging secret offshore accounts.

Such enormous monetary incentives ought to shed light on more frauds and wrongdoings, right? Not necessarily. According to a new study by Ethics Resource Center, the percentage of employees that experienced backlash, or retaliation, for reporting misconduct increased from 15% in 2009 to 22% in 2011. Such retaliation decreases the likelihood of employees reporting misconduct or reaching out to the SEC. But we can hope that the recent rewards encourage more individuals to rise above the potential backlash and come forth to do the right thing, even if it is for a purely monetary reason. 


Written by: Ritika Gawande 
Photo credit: http://www.darkgovernment.com/ 

Tuesday, 11 September 2012

Painful Exchange Rates



Since the start of my semester in London I’ve been experiencing something across the Atlantic that’s been difficult to deal with.  It's something I heard about before traveling to the UK, but something I had never experienced first hand.  No, it's not the adjustment I’ve had to make to the differences in culture, how classes are taught differently, or even how apparent it is, at least to me, how badly the United States & Americans in general are made fun of outside of the States.  Nope, it’s how expensive the UK's sterling pound is compared to its American counterpart, the dollar and subsequently the euro.  

Last week, the sterling pound posted its best numbers against the dollar since June.  This occurred due to a variety of reasons, but simply, the world has pretty much lost faith in the ECB and the Fed.  With respect to the ECB, it has recently revealed a plan to lower borrowing costs to peripheral euro zone countries.  The UK is the Eurozone’s largest trading partner and this easing of the debt crisis is what has been inflating the sterling's value -- especially against the dollar. Also, on Wednesday we will know for sure whether Germany will back the Eurozone’s plan to issue a permanent bailout fund.  There will be skepticism whichever way the decision goes.  What we can see here is that it's not so much how well the sterling is actually doing, but how badly the euro is.  In terms of the Fed, anticipation of QE3 has caused backlash among investors.  Big banks have been issuing warnings suggesting that they are expecting the Fed to embark on its third round of quantitative easing.  Goldman Sachs, Deutsche Bank, Barclays, Morgan Stanley, and JP Morgan all expect over $300 Billion of purchases by the Fed.  Even Barclays’ Olivier Desbarres recently announced that the US dollar would weaken if and when QE3 is announced. All of this anticipation has left a considerable amount of doubt in the minds of investors.  With problems looming with both the euro and the US dollar, investors have limited options to choose from, thus inflating the value of the sterling pound and making my semester abroad in London extremely painful on my wallet.

- Vivek Shah