Monday, June 9, 2014

A guide to the top 1% after college

This article is quite fun to read
"The obvious implication is that you must find a job where the distinction between capital and labor is blurry. A job where you can take a slice off the top by getting paid as if you owned a piece of action even though you don't. Because without some capital working on your behalf, no amount of even the hardest and most skillful labor will get you anywhere near the top. (How many doctors or engineers join the country club these days? Virtually none.)
Let's assume that you won't settle for mere membership in the top 1.0% but have your sights set on the top 0.1% with a corresponding annual income of roughly $4 million. Piketty's analysis of long-run returns (4% to 5%) suggests that this would require you to have roughly $100 million of capital working on your behalf. Although this seems daunting -- it's what the average American makes in 2,000 years -- fear not, for there are a few places where this type of money can be found:
Listed stocks: The average Fortune 500 company has a market value of $28 billion (280 times more than you need) and its real owners -- the shareholders -- are virtually powerless to stop senior management from taking 3.0% or more off the top. So even if the company's performance is lackluster, and the pot is split between you and four or five other top guys, there's plenty to go around. So while the corporate ladder can be long and greasy, it's worth the climb. I'd suggest you steer clear of smaller companies as they're just as hard to run as the bigger ones but don't hold enough capital -- the average Russell 3000 company has a market value of only $1.4 billion -- to be worth your while.
...[ Read the link for more]

Friday, June 6, 2014

Job creation remains steady, 217k jobs added in May

Overall, this is a report that suggests the jobs landscape is … holding steady. At least after one read-through, there’s nothing that stands out as either great or horrible. The economy continues to plod along steadily.
All told, over the last 12 months, the U.S. economy has added over 2.38 million jobs overall and 2.36 million in the private sector. What’s more, May was the 51st consecutive month in which we’ve seen private-sector job growth. The year isn’t quite half over, but 2014 is currently on track to be the best year for U.S. job creation since 1999.

Wednesday, June 4, 2014

All the world's most powerful (mostly) men in one place

This article is written with a humorous tone, but the matter is pretty serious: the Bilderberg Conference is an annual meeting of effectively the most powerful people in business and politics across the globe. It's totally off the record, but the list of who attends and their agenda is published every year preceding.

What do you think? Is it okay that our government officials attend these secretive meetings?

WATCH: Elizabeth Warren And Thomas Piketty Discuss Inequality

I'm not sure if we're done with blogging, but if you have an hour to spare, you should watch this.

Tuesday, June 3, 2014

Big Banks, Big Fines

The US Justice Department recently announced they are seeking a $10BN fine for BNP Paribas.

Needless to say, they are a bit pissed.

What do you think, too much or deserved? 

Drug Companies Making Drugs, or Money

Here is an article from the NY Times:

This relates to a discussion we had in class on at least one occasion regarding our health system and the operations and goals of drug companies. The article includes interesting figures as well.

Seattle votes for $15 minimum wage

Wages would begin to rise next year, ultimately reaching $15 from Washington state's minimum of $9.32 over three to seven years, depending on the business.
One councillor said the vote "sends a message heard around the world".
US minimum wage is $7.25, although 38 states have set higher levels.
The states of California, Connecticut and Maryland have recently passed laws increasing their respective wages to $10 or more in coming years.
Nationally, US President Barack Obama has called for a $10.10 federally-mandated minimum wage, which would require action by the divided US Congress.
Under the plan, firms with more than 500 employees nationally will be given at least three years to phase in the increase, those who provide health insurance subsidies would get four years and smaller businesses would be given seven years.
Click here to read more and to see a map of the U.S. with minimum pay spreads across different states. 

Monday, June 2, 2014

The New Skyscraper Curse

I found this fascinating article on the Ludwig von Mises Institute's Daily Blog section. The interview looks into Andrew Lawrence's Skyscraper Index and the economist argues that the construction of tall skyscrapers will most likely correlate with an asset bubble. It is important to note that Andrew Lawrence argues that there is a correlation (that does not mean causation) between construction of tall skyscrapers and economic busts.

Here is the link to the article:

Here is a key quote from the section:

The confluence of regional skyscraper signals in Europe, North America, and China along with a skyscraper alert for a world economic crisis clearly suggests the possibility of a looming world economic crisis. This pattern would be very much like previous episodes of skyscraper records including the Panic of 1907, the Great Depression, the stagflation of the 1970s, the dot-com bubble, and the housing bubble. In line with these skyscraper-based predictions, a fundamental case can be built around the notion of a looming world economic crisis. Most of the world’s major economies are facing pressing economic difficulties, including the U.S., Europe, Japan, and China. Additionally, central banks have been engaged in a world currency war on a scale that has never been experienced in human history.

Families Struggling to Afford Food in OECD Countries

Residents in OECD Countries Report Struggling to Afford Food

The OECD has many wealthy countries among its ranks, but the recent
global recession has been difficult on the residents of those countries.
Individuals with young children were particularly vulnerable, with more
than one in five such individuals struggling to buy food.

An interesting finding is that the U.S., despite being a geopolitical
superpower and the largest world economy, performs worse than many
other OECD countries in terms of its residents being able to afford

Families Struggling to Afford Food in OECD Countries

Sunday, June 1, 2014

Private Equity

Since everyone's trying to steal my Chief Blogger thunder, here is another article:

This article examines  the risky, but potentially extremely lucrative, practice of investing in private equity and mutual funds.

Amazon and Book Publishers

I know it's not my week to post, but I found this article interesting. Amazon has been coming under pressure for their practices and treatment of book publishers. The NYT has written an article on what publishers can do in response to Amazon. They present the idea of a monopsony, which is an interesting idea to contrast with a monopoly.

Google to close Motorola smartphone factory in Texas

Google's Motorola Mobility has said it will close its Fort Worth, Texas factory after its Moto X smartphone failed to appeal to consumers.
The facility - which is the only smartphone factory in the US - opened in May of last year.
At its peak, the factory employed 3,800 people, although now only 700 workers remain.
In January, Google said it was selling the Motorola Mobility unit to Lenovo for $3bn (£1.8bn; 2.2bn euros).
That deal is expected to close later this year.
When the Texas plant opened last year, Motorola said it was aiming to challenge the conventional wisdom that manufacturing advanced electronics products like smartphones in the US would be too expensive.
However, poor sales of the Moto X smartphone in the US - which initially retailed for $600 before the price was dropped to $399 - made it difficult to justify the higher costs of the plant.
According to research firm Strategy Analytics, the company sold 900,000 Moto X smartphones worldwide in the first three months of 2014.
Motorola says that the Moto X smartphone will still continue to be manufactured at plants in China and Brazil.
Was this the best course of action for Google?

US economy contracted in first quarter of 2014

Some grim stats on the U.S. economic growth slowdown in a short BBC article.
The US economy shifted into reverse in the first three months of 2014 shrinking by an annualised rate of 1%, official estimates have shown.
It is the worst economic performance since the first quarter of 2011.
It is also a big fall on the 2.6% rise in economic output in the final quarter of last year.
The US Commerce Department's first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%.
The fall in output was blamed on an unusually cold and disruptive winter - one of the coldest in the US for 20 years - and a plunge in business investment.
Economists estimate the weather could have cost up to 1.5 percentage points of GDP.
However, the Commerce's Department's report did not estimate the effect of the winter weather.
The fall was also twice as big as economists expected.
Most Wall Street analysts had forecast the economy to contract by around 0.5%.
But the Commerce Department said there was already evidence that the economy was rebounding, with data ranging from employment to manufacturing activity already pointing to a sharp acceleration in economic activity in the second quarter.
Tumbling exports, while not as severe as initially thought, combined with stronger imports in the first quarter resulted in a larger than expected trade deficit which shaved 0.95 percentage points off US economic output.
Consumer spending, which accounts for more than two-thirds of US economic activity, increased by 3.1%, which was revised up slightly from 3% in the first estimate.
Business spending on non-residential structures, such as gas drilling, fell by 7.5%. It had previously been reported to have increased by 0.2% .
The report showed corporate pre-tax profits also plunged 13.7% in the first quarter, the biggest drop since the fourth quarter of 2008.
The White House said the GDP revision was subject to a number of notable influences, including the severe winter weather, which temporarily lowered growth.
It added: "The President will do everything he can either by acting through executive action or by working with Congress to push for steps that would raise growth and accelerate job creation, including fully paid-for investments in infrastructure, education and research, a reinstatement of extended unemployment insurance benefits, and an increase in the minimum wage."

This article is about transparency and SEC involvement in the oil industry. 

This quote on regulation comes straight from the mouth of Shell's CFO, “No one benefits from an outcome under which multinational resource companies are required to file multiple reports in multiple jurisdictions providing substantially the same information in different forms,”

What are everyone's thoughts on the current regulatory state in the oil industry? Does it need reform? Is the complaint of Shell's CFO a legitimate one?