Source: Business Week Online November 19, 2008
Author: Reena Jana
Concept: Discretionary spending, recession
Brief Synopsis: This article is interesting in that it talks about spending on toys and how this spending is affected during a recession. With the holiday season in full swing toy makers expect to see constant sales. According to the article, although adults tend to cut back on discretionary spending, such as gadgets and "toys" for themselves, they tend to continue to purchase toys for their children. As a result, the toy industry is known as recession resistant, even recession proof.
My Thoughts: This is something that I've never really thought about, probably because I've never seen the economy as bad as it is now. However, I find it interesting that the toy industry can endure recession. Then again, looking back at my childhood my parents always did without so my brother and I could have nice things. Even today my mom will go without buying new clothes to help me with my cost of living if needed. Reading this article got my mind racing wondering what else weathers the storm. Obviously bad habits such as smoking and drinking tend to remain the same-as these industries are highly inelastic and something people become dependent on. However, other than the necessary items, I can't think of discretionary spending habits that would remain constant in a depression. Perhaps movie rentals would increase if people get rid of cable to save money?
Thursday, November 20, 2008
Dems to Detroit: No Bankruptcy
Source: Business Week Online November 20, 2008
Author: David Kiley
Concept: Bailouts, Bankruptcy (revisited)
Brief Synopsis: This article follows up after the Detroit automakers went to Congress and came back without the $25 billion bailout they were hoping for. They do have another chance to ask for the money on December 8th, but according to the article, if the companies do not come up with a clear cut proposal of how they're going to use the money and show financial viability they will not get the money. And, although Ford is doing the best among the three auto makers, if Chrysler and GM fail, Ford will inevitably see an end as well. Consumers are standing back and seeking auto companies that are not posing failure.
My Thoughts: I think that in order to help these auto companies people who originally bought from these three should continue to seek their products if they want the companies to succeed. Consumers always act out of fear. For example, we hear recession and get rid of all our stocks. We hear a company might be going out of business, and instead of buying its products to keep it afloat, we seek out alternative companies. However, if people believe the quality of the products are valuable, they should continue to purchase them so the company does not fail. Our fear is really what hurts these companies and the economy. Congress can give these companies money, but will it really work? If consumers don't have confidence in the companies they will not purchase its vehicles, which would make the bailout pointless. Our country and it's citizens really need hope for the future....
Author: David Kiley
Concept: Bailouts, Bankruptcy (revisited)
Brief Synopsis: This article follows up after the Detroit automakers went to Congress and came back without the $25 billion bailout they were hoping for. They do have another chance to ask for the money on December 8th, but according to the article, if the companies do not come up with a clear cut proposal of how they're going to use the money and show financial viability they will not get the money. And, although Ford is doing the best among the three auto makers, if Chrysler and GM fail, Ford will inevitably see an end as well. Consumers are standing back and seeking auto companies that are not posing failure.
My Thoughts: I think that in order to help these auto companies people who originally bought from these three should continue to seek their products if they want the companies to succeed. Consumers always act out of fear. For example, we hear recession and get rid of all our stocks. We hear a company might be going out of business, and instead of buying its products to keep it afloat, we seek out alternative companies. However, if people believe the quality of the products are valuable, they should continue to purchase them so the company does not fail. Our fear is really what hurts these companies and the economy. Congress can give these companies money, but will it really work? If consumers don't have confidence in the companies they will not purchase its vehicles, which would make the bailout pointless. Our country and it's citizens really need hope for the future....
Sunday, November 16, 2008
Sex, Lies, and Subprime Mortgages
Source: Business Week Online November 13, 2008
Authors: Mara Der Hovanesian
Concept: Corruption, business practices, whistleblowing
Brief Synopsis: In light of the failures of the mortgage industry, recent corrupt practices have come to the surface. This article discusses how mortgage wholesalers would trade sex and sexual favors to get more loans, or get subpar loan applications approved. People in the industry were also said to have fixed loan applications by creating false information, inflating people's actual incomes, and creating job descriptions that heightened loan approval. One woman says that she would deny subprime loans that seemed suspicious, but would be overridden by her superiors. As a result, she was denied her bonus and was given more work on religious Holidays-she is very religious. Not only that, but whistleblowers also felt the same reprecussions and saw lower commission checks.
My Thoughts: One would think after the Enron scandal that major companies would learn a lesson. However, as they say, History has a way of repeating itself, and this can definitely be seen with the mortgage failures. I just find it hard to believe that all this corruption and bribery was going on and not one person was able to speak up and let this out. There are laws protecting whistleblowers. Basically, the people who said they weren't participating in the corruption are just as much to blame as those who were. However, after learning about all this, it makes me think none of these companies should be bailed out.
Authors: Mara Der Hovanesian
Concept: Corruption, business practices, whistleblowing
Brief Synopsis: In light of the failures of the mortgage industry, recent corrupt practices have come to the surface. This article discusses how mortgage wholesalers would trade sex and sexual favors to get more loans, or get subpar loan applications approved. People in the industry were also said to have fixed loan applications by creating false information, inflating people's actual incomes, and creating job descriptions that heightened loan approval. One woman says that she would deny subprime loans that seemed suspicious, but would be overridden by her superiors. As a result, she was denied her bonus and was given more work on religious Holidays-she is very religious. Not only that, but whistleblowers also felt the same reprecussions and saw lower commission checks.
My Thoughts: One would think after the Enron scandal that major companies would learn a lesson. However, as they say, History has a way of repeating itself, and this can definitely be seen with the mortgage failures. I just find it hard to believe that all this corruption and bribery was going on and not one person was able to speak up and let this out. There are laws protecting whistleblowers. Basically, the people who said they weren't participating in the corruption are just as much to blame as those who were. However, after learning about all this, it makes me think none of these companies should be bailed out.
Friday, November 14, 2008
GM Failure: The Shockwave
Source: CNNMoney.com November 14, 2008
Authors: Peter Valdes-Dapena
Concept: Bailouts, Bankruptcy
Brief Synopsis: This article discusses the effects that will be seen if GM fails. It points out that a domino affect will occur, where suppliers will be hit first and the hardest, potentially closing their doors as a result. Next would be the the dealers, followed by the dealer competitors. GM is seeking Government assistance rather than filing Chapter 7 bankruptcy to reorgranize the company. But will the government bail them out? And where do you draw the line?
My Thoughts: I think that something does need to be done for GM, otherwise it is scary to imagine what will happen as the dominos start to fall. However, I also feel that the government, and ultimately tax payers, can not continue to bail companies out. We can barely keep our individual households above water, why are we expected to help major companies out? Not only that, but when does the Government say enough is enough? If one company gets bailed out everybody is going to feel entitled to a bailout. Where does all the funding come from? Eventually it will have to end somewhere.
Authors: Peter Valdes-Dapena
Concept: Bailouts, Bankruptcy
Brief Synopsis: This article discusses the effects that will be seen if GM fails. It points out that a domino affect will occur, where suppliers will be hit first and the hardest, potentially closing their doors as a result. Next would be the the dealers, followed by the dealer competitors. GM is seeking Government assistance rather than filing Chapter 7 bankruptcy to reorgranize the company. But will the government bail them out? And where do you draw the line?
My Thoughts: I think that something does need to be done for GM, otherwise it is scary to imagine what will happen as the dominos start to fall. However, I also feel that the government, and ultimately tax payers, can not continue to bail companies out. We can barely keep our individual households above water, why are we expected to help major companies out? Not only that, but when does the Government say enough is enough? If one company gets bailed out everybody is going to feel entitled to a bailout. Where does all the funding come from? Eventually it will have to end somewhere.
Thursday, November 6, 2008
IMF Says Global Outlook Has Deteriorated
Source: Fox Business.com November 6, 2008
Author: Donna Fuscaldo
Concept: Financial Outlook, Recession
Brief Synopsis: This article talks about the world economic position and predictions for the future. In the future, it is believed that the economy will contract for a full year period. A recession occurs when growth declines two quarters in a row. Basically--the article notes the world is inevitably heading toward a recession so we need to get prepared.
My Thoughts: I believe that this has been a long time coming and I am surprised that people are just now beginning to say a solution must be found. I've read other articles that say Obama's entrance into the White House will be much like that of FDR and I believe this is necessary to turn the economy around. Obama has a lot to take care of going into the Presidency but I believe he can be the one to turn things around and give people faith in the economy again.
Author: Donna Fuscaldo
Concept: Financial Outlook, Recession
Brief Synopsis: This article talks about the world economic position and predictions for the future. In the future, it is believed that the economy will contract for a full year period. A recession occurs when growth declines two quarters in a row. Basically--the article notes the world is inevitably heading toward a recession so we need to get prepared.
My Thoughts: I believe that this has been a long time coming and I am surprised that people are just now beginning to say a solution must be found. I've read other articles that say Obama's entrance into the White House will be much like that of FDR and I believe this is necessary to turn the economy around. Obama has a lot to take care of going into the Presidency but I believe he can be the one to turn things around and give people faith in the economy again.
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