How One Burger Chain Profits from Turmoil Abroad

            The American burger chain, Fatbuger has taken an interesting route in the strategy of global expansion.  The Los Angeles Based Company, which currently has 200 international locations, has become known for their expansion into less than desirable locations. Andy Wiederhorn, the firm’s founder recognizes the demand and desire for American brands in foreign countries. With strong competition in the United States and the pending financial crisis in 2008, the company went global in 2007.

            Numerous of Fatburger’s locations are settled in places experiencing tumultuous times. However, this does not concern the company.  Before expanding anywhere significant research is done. This research starts as examining all risk and concerns and then identifying how to best deal with them. One of the recommendations made for this research is using a consulting group. In addition, it was stated that a U.S. management team could not accurately access dangerous locations for expansion without an expert team in that location.

            With the reports that have been written in this class examining countries for business opportunities, very few would recommend entering a country with any kind of dangerous situation. This article raises the point that if it is done correctly and through a thorough process companies such as Fatburger can be successful.

Source:http://www.businessweek.com/printer/articles/235312-how-one-burger-chain-profits-from-turmoil-abroad

LinkedIn Users Are Suing The Site Over A Feature They Say Ruined Their Job Searches

LinkedIn is a professional networking site that has more than 300 million users. The purpose of the site is to help you get a job, but this article highlights a feature of LinkedIn that can accidentally have the opposite effect.

This feature is “Reference search”, a product offered to the site’s premium members. \Reference search gives the hiring company a list of people in their candidate’s network, including their old colleagues The hiring manager can then use a LinkedIn’s tool “InMail” to reach out to these people, and get their opinion about the candidate. This means that this feature can hurt the job hunters by opening them up to possible criticism from past coworkers and hirers.

But then again, LinkedIn is generally the monopoly of this kind of network. The lawsuit will likely fail, because I don’t think the best way to evaluate candidates is to contact random people on a social network who may not know the candidate and their job performance and personality. If a company actually does that then they should probably review their hiring process. Either that, or people are just finding excuses for being unemployed.

http://www.businessinsider.com/this-linkedin-feature-could-ruin-your-job-search-2014-11

China's Economy-Deflated

http://www.economist.com/blogs/freeexchange/2014/11/chinas-economy?zid=295&ah=0bca374e65f2354d553956ea65f756e0

          As surprising as it may sound, China, one of the worlds largest economy is currently going through deflation. Consumer and producer prices are falling for a while now and consumer price inflation is said to be at its lowest since 2010.
          Central bankers fear deflation and believe that it is the most destructive economic force as it causes consumers to delay purchases and companies to put off investment which in turn creates a viscous cycle of contraction.
          Moreover, the producer price index that is the PPI has reached the negative numbers. The PPI has been in deflation straight for the past 32 months. It has been caused mainly due to the slump in global commodity prices.
         The central bank of China has still not made a decision.

Will a Higher Minimum Wage Really Reduce Income Inequality?

http://money.cnn.com/2014/01/15/news/economy/income-inequality-minimum-wage/

Raising the federal minimum wage has been a high priority for President Obama. In so doing, Obama believes the increase will be good for both the economy as well as for families. The article above attempts to answer the real question behind the issue, whether or not the change will reduce income inequality. Proponents of the increase argue that the change may bring lower-wage workers over the poverty line. They also claim it will help restore the value of the minimum wage, which has not kept pace with inflation. Most experts believe it will reduce inequality but will not have a huge impact.

The article examines how much of an impact the increase will have and who exactly it will affect. To illustrate the impact, the author has the reader consider the 5-figure paycheck of a janitor versus the 8-figure salary of a CEO. Elevating the minimum wage from $7.25 to $10.10 would simply fail to narrow this gap. Additionally, there is a huge gap between those making 6-figures and billionaires. So, too, a change in the minimum wage would do nothing to narrow this chasm. Moreover, there is a gap between low-wage and middle-wage workers. This is the target where many say progress would be made.

Ultimately, increasing the minimum wage will not alter some of the root causes of income equality. I believe that focusing on globalization, technology and the U.S education system are better options than raising the minimum wage. 

Uber Said in Early Talks to Raise $1 Billion to Fund Growth

http://www.bloomberg.com/news/2014-11-09/uber-said-in-early-talks-to-raise-1-billion-to-fund-growth.html

Uber is an app that allows people who need a ride to connect with a driver through their app. Since Uber Technologies Inc. was founded in 2009, this service is available in over 200 cities worldwide. Recently, Uber began a campaign to raise around $1 billion to finance the businesses rapid expansion. New investors as of recent have been lining up at the door to get in on this opportunity, this may be because of the current technological stage we are in, but do you think this stage will last? How much longer do you think new investors will keep showing up wanting to put their money in this business? There is competition in the field, a similar app called Lyft which as of recent has raised $250 million earlier this year for their own business expansion. These two companies have reportedly engaged in rough tactics to recruit drivers, leading to a former executive of Lyft being sued when defected to Uber for breach of contract. Personally I really like the app, I use it all the time back home to get around town, it’s quick and it’s cheap. I’m not saying I am the next investor but I can see why people are jumping at the chance to get on board of this rising business. I’m interested to see how much longer Uber can keep up the rate of expansion as they have now. 

Detroit's bankruptcy plan --- A phoenix emerges

Link to Article

The article tells us that Detroit's plan for the adjustment of debts that will help the city pay off $7 billion of unsecured liabilities from its $18 billion. This shows that Detroit is doing pretty well on handling its bankruptcy but both pensioners and both bond holders will take the pain under the agreement. People's pensions of retirement will be cut by 4.5%. Health care benefits will also be cut by 90%. Bond holders like Syncora has to face huge cut, it will only get 26 cents on one dollar. Foundations, private donors and the state of Michigan raised $816 million to protect Detroit Institute of \Arts (DIA) from the city's creditors. The funds will go toward public workers' pensions. But it is only the beginning to be fully recovered since the situations that Detroit facing do not seems hopeful.
The adjustment plan sets aside $1.7 billion for basic services and infrastructure over the next nine years, but Detroit will probably run out in about five years. The city has to rebuild its credibility as soon as possible in order for outsiders to lend to.

Detroit needs good governance in order to get back up. With that said, our government needs to put the money into cities in need like Detroit instead of putting extra money into military defenses. Eliminating welfare for all able bodied people will help kick off people who depends upon welfare and crimes -- Ghetto Gangster class, will also help with the city's recovery.

Negative Rates in Germany?

http://www.economist.com/news/finance-and-economics/21631140-interest-rates-turn-negative-some-worse-nothing

What we have discussed in class is unfolding dramatically in Germany. To decrease savings, banks not only have lower interest rates than inflation, they are applying negative interest to sums greater than $625,000 (500,000 Euros). They are doing this to increase investing in longer term more liquid investments because the bank can make more money from this.

Some worry that the negative rates will encourage lending too much and without economic reform, we could see a very unstable system. As the German's struggle to figure out their lack investing issues, the world sits back and watches as the Euro falls and the Dollar gains value.

U.S. has added 2.3 million jobs this year

According to the government report released last friday, the unemployment rate fell to 5.8%. There is more optimism about hiring even though October fell short of expectations. On average the U.S. is adding around 200,000 jobs each month this year so far. 

The consistency of job creation and continued falling of unemployment is something to be optimistic about; however, wages are still stuck at $24.57 (average hourly). Long-term unemployment still seems to be a major problem as well. Although it has been dropping, it is still twice as much as its pre-recession level. 

Optimism about the state of our economy is certainly growing, many americans are still waiting to jump on that bandwagon. Until we see wages accelerate, there will be a large majority of americans who will continue to feel more pessimistic than optimistic. 

Australia Challenges Use of Unpaid Internships

http://www.nytimes.com/2014/11/10/business/international/australia-challenges-use-of-unpaid-internships.html?ref=business&_r=0

This article discusses the legality of unpaid internships in Australia as well as comparing them to the United States model. While these internships are often thought of as stepping stones to dream jobs, they come at a high financial cost. Oftentimes, these internships require extremely demanding hours leaving no time for a supplementary job. Many young adults spend their entire life savings just to work for free. Currently, Australia is looking into changing internship policies. For example, the US uses a scale to determine which interns should be paid. It will be interesting to see what they decide and the economic impact these decisions will have.

Diamond engagement rings are so over

Nowadays, there is a new trend among brides to choose non-traditional engagement rings over the standard white diamond ring, such as colored diamonds, gemstones and bands.

There are a few reasons behind this trend. First, it's about lifestyle. People want something that is unique to them. They want something that doesn't fit the norm and everyone else has. Also rings without an elevated diamond are more comfortable to wear and fit in well with today's active and conservative lifestyle, instead of a flashy one.

The price is also a big factor. For example an alternative sapphire engagement ring costs about half of a comparable diamond. Getting alternates also reduces risks of buying fake diamond.

However, there are opposite ideas, like diamond rings are much more durable and classic. Also, an engagement ring is not the place to make a fashion statement.

http://money.cnn.com/2014/11/06/luxury/diamond-engagement-rings/index.html?iid=HP_River

Twitter's Future: How High Can it Fly

On November 7 Twitter celebrated it's first anniversary of being a public company.  However investors haven't had much confidence in the company.  Some believe that it can grow and become a Google type stock, and some believe it won't grow much at all.  Even though Dick Costolo, who runs the company, has made big tweets in the past promising major growth in the next few years.

Twitter gets it's revenue from advertisers and inserted a 'promoted tweet' in people's feeds.  They don't get any revenue from people signing up and creating accounts.  However they don't seem to have enough space on their home page for more advertisements that will give them enough revenue to compete with Google and Facebook.

http://www.economist.com/news/business/21631045-all-its-success-so-far-social-media-firm-may-not-achieve-scale-many-investors-hope

American Middle Class "Wealth" Worse than Every Nation but Russia and Indonesia

http://www.zerohedge.com/news/2014-11-07/american-middle-class-wealth-worse-every-nation-russia-indonesia

It’s not surprising when another claim is made that the middle class is dying; reports and surveys have been made for many years now saying the same thing. This article puts the severity into a little perspective. Despite what many Americans believe about the strength and power of their wealth, wealth inequality is a major problem in the US. The Global Wealth Data Book has recently published new findings, and it isn’t pretty; upper middle class Americans are rapidly losing ground to the one-percenters, who averaged 5 million in wealth gains over just three years. “The upper middle class of America owns a smaller percentage of wealth than the corresponding groups in all major nations except Russia and Indonesia.” America’s bottom half compares even less favorably to the world, as it ranks in dead last with just 1.3 percent of national wealth. 

Solid US Hiring, Americans Anxious

http://www.cnbc.com/id/102163705


This article highlights the main difference between the great upswing in the economy, and the inability of the public to recognize it. The article serves to highlight the reasons of the public's misinformaton or conception of the markets improvement. While overall wages increased 3 percent over inflation, the went up over 10 percent for the wealthiest 10 percent. This sort of wage inequality is causing a lack of recognition of the overal upswing in the economy. Unemployment is at a 6 year low, and this years average monthly gain in jobs is the best its been since 1999.

This sort of misonception is leading to a change of power in office, as many of the public reflect their dissatisfaction with the upheaval of their current powers. With replublicans in office, their will be a huge cut in government spending, with a tax cut as well. The tax cut will increase wages, and therefore increasing the demand curve. However, we know the government spending multiplier would increase overall demand more than a tax cut would, so the effects may turn out to be more detrimental than helpful.

Coming to America: chickens from china

                                    

         According to the article, the U.S Department of Agriculture gave four Chinese companies approval to export cooked poultry products to the United States. But, in order to export chicken to the U.S, the chicken itself must come from countries that have USDA approved poultry standard (America, Canada, Chile). Therefore, this is not an effective way to do business, the Chinese companies would need to have chickens shipped in frozen from America, then cook them, refreeze them and send them back to...America. Until now, no Chinese chicken product has been exported to the U.S, but, this is a victory for China’s poultry industry because it’s mean that some of the processors are up to U.S standard. 

http://money.cnn.com/2014/11/07/news/chinese-chickens/index.html?iid=HP_River

Detroit on the Up?

                      Less than two years ago Detroit went bankrupt, and was the largest U.S. city to ever do so. Recently, U.S. judge Steven Rhodes approved Detroit’s plan to recover from the bankruptcy and turn its economy around. This plan includes a 4.5% cut to pensions, and spending over $1.7bn to demolish abandoned buildings and other such measures that will alleviate approximately $7bn in debt. One of the demolition projects includes the deconstruction and reconstruction of Joe Louis Arena, home to the red wings. 
                    
                     The pension cuts will definitely ruin the lives of many retirees or soon to be retirees that were counting on that money. 4.5% is a pretty big portion, so we should expect to see some serious unrest and protesting, as well as older people struggling financially. However, on the positive side the $1.7bn of government spending will increase the amount of available jobs: especially those in the construction/demolition field which might even be union workers. On that same note, the news that Detroit will be on the up will definitely give some positive financial vibes to the city and increase consumer confidence. This could lead to increased consumer spending. 
           
                      As to why Detroit ended up bankrupt in the first place, this was mostly the result of both bad and corrupt mayors, as well as bad deals, and unreasonable promises to those receiving pensions. What is important to note as well is the decrease in population from 1.2m in 1980 to 688,000 now, which seriously decreased the amount of tax revenue for Detroit, and thus hurt it financially. So, for the future, Detroit definitely needs to work on keeping its mayors in line and not make financial promises that it can’t keep: which includes monitoring its financials more closely.

Five Economic Reforms Millennials Should be Fighting For

http://www.rollingstone.com/politics/news/five-economic-reforms-millennials-should-be-fighting-for-20140103

This article from Rolling Stone outlines "five economic reforms millennials should be fighting for".  The Jesse Myerson begins by stating that the "economy still blows," and that instead of merely complaining about it, millennials should start getting behind causes that actually could change something.  His ideas are as follows:

1. Guaranteed Work for Everybody:
     The idea here is that anyone who wants to work would be able to find a job in the sector of their choosing, while being paid a living wage.  Myerson states, "The program would automatically expand during private-sector downturns and contract during private-sector upswings, balancing out the business cycle and sending people from job to job, rather than job to unemployment, when times got tough."

2. Social Security for All:

     The idea here is that the government would add a sum to everyone's bank account each month.  This, along with job guarantee, would allow participation in the labor force to be voluntary.

3. Take Back the Land:

     If a land-value tax is put in place, there will be no free-rides and wealthy real-estate owners will not be able to take advantage of the market in the way that they have.  

4. Make Everything Owned by Everybody:

     Get rid of the 1% that own most of the country's capital stock.  This could be done by collectively buying up the stocks and bonds that have previously been owned by the elite.  "Think of it like a big investment fund that buys up assets from the private sector and pays dividends to all permanent U.S. residents in the form of a universal basic income."

5. A Public Bank in Every State:

    This would essentially create mini-Wall Streets in each state.  It would allow loans to be taking out more locally and economic reform to happen on a much smaller scale, closer to home.

Blogger's Note:  The opinions in this article do not necessarily match mine.  They contradict much of what we have learned in class, however, they also provide an interesting platform for debate.

Tax reform in India The truck stops here

The article goes into detail regarding the issues regarding an indirect tax reform system. It shows that India has had problems implementing a free trade agreement with itself and even that so for years. A recent World Bank report shed light on how corruption in India's bureaucracy system has lead to its long distance truckers to be parked 60% of their time. A recent proposal to harmonize the system has been has been introduced in a form of a goods and services tax (GST). This proposal has been around since 2007, but the recent regime change has made it a center piece for moving forward. 
A well designed GST would essentially give a boost to manufacturing and limit corruption and furthermore make India a true common market. A sin charge of extra tax on Alcohol petrol and tobacco would be implemented. In terms of politics the government must secure an agreement of 29 states to implement a common rate. The states must essentially give up their power on implementing taxes. Many worry about the loss of income as indirect taxes are a big chunk of state revenue. But in terms of exceptions many worry if too many are made the GST might just become the new solution with a mere different name. 

Source:
http://www.economist.com/news/finance-and-economics/21631147-fix-indias-indirect-tax-system-overdue-it-may-fall-short

Forget the 1% It is the 0.01% who are really getting ahead in America

http://www.economist.com/news/finance-and-economics/21631129-it-001-who-are-really-getting-ahead-america-forget-1

The article talks about the growing inequality in the share of wealth held.  In 1976 about the share of wealth held by the top 1% was at about 19%.  Compared to in 2000 the percentage shared by the 1% was 21%.  This 2% increase is pretty unheard of, the percentage change in wealth held is usually very small percentage changes.  Before the great depression the middle class (bottom 90%) controlled about 16% of the wealth, and the top .01% controlled about 25%.  Once the great depression hit the trend reversed and the bottom 90% started increasing their share of wealth.  Their share continued to grow all the way to 36% until the early 1980s.  Where once again the trend had reversed and the bottom 90 started losing their share of wealth again.  The author suggests that main reason that this income disparity is increasing and returning to pre Great Depression numbers has to deal with increasing debt of the middle class, largely homes values rising did not have much of and increase in wealth because mortgage debt was also rising as well.

In Ukraine Crisis, U.S. Businesses Face Tit-for-Tat Response to Sanctions

The United States and the European Union have placed a number of sanctions on Russia as punishment for supporting the pro-Russian separatists attempting to carve out independent states in Ukraine.  As a result of these sanctions numerous European and American multinational firms operating in Russia have experienced retaliation in Russia.  The retaliation has been defined as tit-for-tat and seen as immature by the western world.

The article gave a number of examples of companies feeling the effects. One of these companies was McDonald’s. In the case of the fast-food chain, health inspectors made a surprise check on a location and filled a frivolous lawsuit that can only be seen as retaliatory. However this is not the worst action to be seen by the Russian government.  Currently, the government is looking at seizing foreign media assets as well as the consideration of laws, which would allow the government to seize foreign-owned assets. 

The situation between Russia and the Western world is causing and will cause a hamper on business done within the country for the near future. Many multinationals have reported losses and have moved their employees out of Russia due to the volatility of the situation.

Source: http://www.nytimes.com/2014/11/07/business/international/in-ukraine-crisis-us-businesses-face-tit-for-tat-response-to-sanctions.html?ref=international&_r=0