How to spend £75m

http://www.economist.com/blogs/gametheory/2014/08/football-transfers

In the article How to spend £75m, Game Theory Sports investigates the history of soccer transfers. Last summer the Premier League saw the third most expensive transaction in soccer history. Liverpool, who was predicted to place fifth in the league, dealt superstar Luis Suarez to Barcelona for £75 million, which is equivalent to $124 million. The contract for the Suarez ranks in the top 50 most lucrative contracts of all time. The two footballers that have bigger contracts than Suarez are Lionel Messi from Barcelona and Gareth Bale from Real Madrid.

In the past, it has been difficult for Premier League teams to replace their most valuable and fittingly their most expensive players. Game Theory Sports looked at the change in soccer teams wages since there has been a positive correlation, around 90%, between wages and league rank. Three years ago Liverpool also sent another star, Fernando Torres, to Chelsea for £50 million or $81 million. As a result, Liverpool received 20 less points toward their standings during the season. Liverpool went from finishing second in the league, to sixth and then eighth in the subsequent years. The correlation seems obvious that trading expensive and valuable players would result in worse performance, but that has not always been the case. Manchester United, Arsenal, and Everton have all experienced similar result after trading away some of their best players as well.

In an attempt to replace their star in 2011, Liverpool purchased another star from Newcastle, Andy Carroll. The problem with the transaction was that Newcastle knew that Liverpool had excess in cash flow, thus inflating the cost of replacing the footballer. Also, by trading away valuable players, teams are helping their rivals. In all, it is better for teams to keep their star players rather than cashing them in.

CVS Is Now CVS Health (NYSE:CVS) After Stopping The Sale Of Tobacco Products

As of this past Wednesday, September 10, CVS Caremark Corporation made the decision to change their name to CVS Health, and to go along with their new name, discontinue their sales of all tobacco products. This meant taking a $2 billion cut in their annual sales. Like they say "no risk, no reward," and CVS is hoping their risk will be rewarded by the public by being seen as the pharmacy that really is all about health, and hopefully bring in new clients who want their products sold at, the now tobacco free, CVS stores. The discontinuation of selling tobacco products could also help take American's one step closer to being tobacco free, as was previously discovered was the case in Boston and and San Francisco. Both locations banned the selling of tobacco products in pharmacies, and as it turns out, tobacco sales fell by 13.3%. CVS plans to use the previously tobacco occupied spaces to advertise that they are no longer selling tobacco products, along with selling products that help quit the usage of tobacco products.

I think it will be interesting to see if other retailers follow in the footsteps of CVS. I can see this going two ways. Either this will increase the demand of tobacco products at all other retailers because the supply has now slightly decreased, thus also raising the, already ridiculously high, prices of tobacco products, or health clients will flock to CVS to sell their products, increasing CVS's revenue. Other retailers will see this increase and jump on the bandwagon and become tobacco free. Something very positive about this potential outcome is that the more available products that help people quit using tobacco becomes, the cheaper these products will be. With less retailers selling tobacco products and more selling quitting products, it would be cheaper for American's to kick this nasty habit rather than keep giving in to the addiction.



Link:  http://stocks.org/company/cvs-is-now-cvs-health-nysecvs-after-stopping-the-sale-of-tobacco-products/25280/

 

                             Is Radio Shack Bankrupt? 

http://www.stockwisedaily.com/radioshack-corporation-rsh-says-its-running-out-of-cash/235550/


     RadioShack seems to be running out of funds fast to fully stock their store and pay their employees. The company claimed their sales went down by a whole 20% making them rethink their strategy and to hopefully find better ways to bounce back.

    The company may have to get rid of some stores and let off some of their employers to focus on some of the main stores that bring in the most revenue. They may even consider the fact that they will have to sell out. These 4,500 stores only brought in about 30 million worth of sales which is roughly six grand per store, thats no where near enough money to keep a business running.

    Now with its investors, a lot are either selling stock or waiting for the perfect moment to sell because their is no confidence that the company is going to bounce back. The stock price has dropped nearly 96% with the stocks costing no more than 55 cents.

    I personally have been to Radio shack whether its for iPhone chargers or batteries or little electronic devices that I don't want to have to purchase at a massive store like a Best Buy, yet It's rare that one will visit the store frequently unlike a grocery store or a pharmacy. When I am purchasing an item at radio shack there is no one ever there and theres about three personal on staff. Not every company can survive and we will see if Radio Shack will be revived.

"Stronger Hiring Shines on Long-Term Jobless"

http://www.usatoday.com/story/money/business/2014/09/07/long-term-unemployment/15147943/

One positive to be found in the August jobs report was an impressive decrease in long-term unemployment. The number of Americans without a job for at least six months decreased by 192,000. The long-term unemployed make up 31.2% of all jobless Americans, a percentage that is still historically high, but down 38% from a year ago.  

Studies have shown that employers are reluctant to hire persons that have been out of work six months or longer due to the concern that these persons' skills have atrophied or are no longer suited to the new jobs being created. However, Josh Brivens, research director at the Economic Policy Institute argues that these persons are simply victims of the 2008 recession and that strengthening job growth and a tightening labor market are encouraging employers to hire back these persons.  

The article also mentions that another factor that may be decreasing long-term unemployment is Congress' cut-off of extended unemployment insurance; those who lost benefits are now more likely to accept the low-paying jobs they previously rejected.  

I think it will be interesting to see how the U.S. Government addresses the discrimination that long-term unemployment workers are facing from employers. I am also interested to see how the U.S. will continue its battle against long-term unemployment as it still makes up almost a third of those that are unemployed.  

Black-Owned Businesses Are Quietly Powering Detroit's Resurgence, But No One's Talking About It

http://www.huffingtonpost.com/2014/07/17/detroit-black-owned-businesses-_n_5587466.html

This article is written about a year after the city of Detroit declared bankruptcy. This article focuses on how the city is recovering now mostly due to the Black business owners of the city, but how no other media news source will acknowledge this. I find this article interesting because it talks about how there are over 32, 000 black owned businesses that have been open for decades in the city and have been through bad times before. Also after the introduction 13 Black owned Detroit businesses are profiled.

America has 4.7 million job openings

http://money.cnn.com/2014/09/09/news/economy/job-openings-increase-bls/index.html?iid=SF_E_River

This article is about the economic growth of the US recently. There is an increase of 800,000 job openings since January of 2014. This growth of jobs is causing a growth of income and is the driving force behind a growth in consumer spending, which then creates more job growth. It is a cycle that the people of the US get excited about. Due to the vast amount of job available, according to the data people seem to be happy at their job because they aren't worried about trying to find another one. Due to this fact the quit rate, meaning people who voluntarily left their job, has stayed at 1.8% for the past six months.

Janet Yellen of the Federal Reserve wants to remind people that even though this improvement in the economy looks good, the market still has not fully recovered. it is predicted that August's numbers will continue to improve, businesses will feel more better about hiring people and the job market will continue to grow.

Global Economic Growth Is Expected To Speed Up This Year

           The article talks about how it is predicted that this year (2014), the global economy is going to experience economic growth in USA and other majorly developed countries. It is also predicted that there might be deflation to follow which might be a problem as recovery from this deflation.
           The global economy is supposed to increase by 3.2% which is an 0.8% from last year. The World Bank forecast was that the majorly developed countries will grow more this year i.. 2.2%. The article further suggests that there will be growth in the developing countries such as China and India and though it will not be on a large scale, it will still be economic growth.
           Moreover the article talks about how the federal reserve has reduced the monthly bond-buying stimulus program which leads to the possible risk of reducing the capital and capital flow and a reversal of monetary policy in developing countries would lead to a hinder in the economic growth that is predicted.

Detroit Clears Crucial Hurdle on Bankruptcy

Detroit has reached an agreement with debtors about coming out of bankruptcy, and it has happened much sooner than expected. The bond issuer Syncora Guarantee has been the city's fiercest opponent in the past few months in settling these outstanding debts and the two parties have come to a preliminary agreement. Detroit will be giving them control of the Detroit-Windsor tunnel, allowing the company prime waterfront real estate. This could prove lucrative for Syncora, with the NYT stating that $13.5 million in repairs over the first 5 years could return as much as 40%. Detroit is also making many deals with suburban neighbors to repair their aging water and sewer system, which has caused millions in damage.

Detroit is attempting to get out of courts as fast as possible and are making deals with many private companies. Could these deals come back to haunt them in the coming years of recovery, with many deals, like the one with Syncora, lasting until 2040?

http://www.nytimes.com/2014/09/10/us/detroit-clears-crucial-hurdle-on-bankruptcy.html?ref=business&_r=0

5 reasons to worry about Scottish independence

         For 307 years, Scotland and England have been unified. Their economies, banks, currencies, and industries are tied and, if Scotland should become independent, the consequences will span all of those aspects.
         This past week, the value of the pound against the dollar has fallen to a 10-month low. This is largely because of the uncertainty of its future. Supporters of Scottish independence are fighting to keep the use of the pound in an economic union with the U.K. However, the Bank of England would likely impose strict budget rules if that were to happen. Scotland's only other option would be to create a totally new currency, which would bring about a whole new slew of problems. Adopting the euro is not a viable option.
         The U.K. currently possesses a large amount of debt. If the spilt occurs, the U.K. has said it will honor all of the debt, including that incurred by Scotland. Under these circumstances, the newly independent Scotland would owe the U.K. around 130 billion euros, roughly 10% of the public debt. Supporters of independence have said that they're ready to manage that debt and confident in Scotland's ability to do so. However, analysts at Standard&Poor's believe that the new Scottish economy would be  less capable of handling the debt because of its dependence on earnings from the gas and oil industries, which are prone to shocks.
           The U.K. produces about 90% of the EU's oil, most of which comes from land that would most likely be claimed by the newly independent Scotland. England will most likely want a share of the production and reserves and analysts believe that an agreement could be made. Supporters of independence estimate that oil remaining in Scotland is worth about 1.5 trillion euros. However, the U.K. government argues that it's less than 1/10th of that number.
           Large financial institutions based in Scotland such as Royal Bank of Scotland and Loyds have aired concerns that independence would damage their businesses by lowering credit ratings and increasing costs. The banking sector in Scotland would be 12 times the size of the newly independent economy, which raises concerns about Scotland's ability to deal with future financial crises. Large banks are worried that they may need to move their headquarters to England to avoid future financial strain.
            Supporters of Scottish independence want Scotland to remain part of the EU. However, as a new state, it would need to apply for membership. All 28 states would have to approve their entry, which some states would be reluctant to do for fear of fostering their own separatist movements.
           Prime Minister David Cameron has assured a vote for Britain's membership in the EU, assuming he wins the election next year.
          Overall, it seems like Scotland's separation from the U.K. would be beneficial for neither Scotland nor Britain. Economically, Scotland is unstable and would struggle intensely on its own. The U.K. would lose tons of revenue that it gains annually from Scotland. Scotland would also struggle to find its place and prove itself in the EU as well as the world economy.

Link: http://money.cnn.com/2014/09/09/news/scotland-independence-referendum/index.html?iid=SF_E_River
         

Offshore Oil Drilling

http://www.nytimes.com/2014/08/29/business/shell-submits-a-plan-for-new-alaskan-arctic-oil-exploration.html?_r=0

Any mention of oil drilling almost inevitably spurs conversation regarding its environmental impact. When the discussion turns to offshore oil drilling, the debate is even more heated, not just digging underground but rather thousands of feet underwater. Offshore oil drilling consists of drilling the sea bed from a platform to obtain oil lying beneath the sea; it is a risky activity fraught with potential for spills, and consequent catastrophic contamination. Advocates of offshore drilling maintain that it creates jobs for individuals, who will then spend money from the wages they earn in the local community. This in turn, the argument posits, increases GDP and could play a major role in the recovery of the current overall economy. When environmental depletion is added to the measure of GDP, however, we see that the economy as a whole actually deteriorates, not improves.

            Despite years of legal and logistical obstacles as well as relentless opposition from environmentalists, Royal Dutch Shell attempts yet again to drill for oil in the Alaskan Arctic, one of the great untapped frontiers in the United States. The proposed plan consists of two drilling rigs in the Chukchi Sea, which Shell believes could produce more than 400,000 barrels of oil per day. Such figures however, when weighed against the various costs associated with offshore oil drilling, only superficially impress. Given that Shell’s previous Alaskan Artic efforts have been marked by mistakes and accidents, I believe that the potential benefits of offshore drilling do not outweigh the potential costs. Easily my favorite quote in the article was from Travis Nichols, a spokesman for Greenpeace, who said “Anyone who has been following this story knows Shell is not Arctic-ready. And more importantly, the Arctic will never be Shell-ready.”