This Week In Business and Politics

1. The United States and China agree to coordinate a response if North Korea moves forward with a proposed rocket launch.



2. The United States paid the Afghanistan government $50,000 for every person murdered in the Kandahar Massacre.


3. The Republican Party ramped up efforts to overturn Barack Obama's health-care reform bill on its second anniversary.  The Supreme Court will begin to hear argument for and against the bill today.


4. The African Union deployed 5,000 soldiers to capture or kill head of the a Ugandan guerrilla group Joseph Kony.  His Lord's Resistance Army abducts children and has been accused of murder, mutilation, and crimes against humanity.



5. The Financial Services Committee of the US House of Representatives received a memo quoting the former treasurer of defunct broker MF Global.  The memo stated that Jon Corzine personally ordered the transfer of customer's money to a brokerage account with JP Morgan Chase.



6. President Barack Obama nominated current President of Dartmouth College Jim Yong Kim to be the head of the World Bank.


7. The United Nations appoints Richard Bennett to advocate for the interests of Tibetan citizens  The appointment ended a one-month hunger strike by three Tibetans in the shadow of the UN headquarters in New York City.


8. A tax plan put forth by President Obama will raise $47 billion over ten years according to an analysis conducted by the Joint Committee on Taxation.  The so-called "Buffett Rule" will ensure that millionaires pay more taxes to make up for abolishing the alternative minimum tax on middle-income earners.


9. Apple announced it will return $45 billion of cash to shareholders over the next three years.  The company will tentatively pay a quarterly dividend in the amount of $2.65 per share.  While the yield is a modest 1.8% of the stock price, it will mark the first time Apple has ever paid a dividend.



10. UPS agrees to purchase competitor TNT Express for $6.8 billion.  The next large business opportunity for UPS lies in delivering drugs and medical devices to patients' doors.



11. India's government proposed a retroactive tax on foreign takeovers of Indian assets.  The measure is aimed at Britain's Vodafone, which has been in dispute with the Indian government over billions of dollars in capital-gains tax on its 2007 acquisition of an Indian mobile-phone company.    

Be Persistent

About 30 years ago, a young woman graduated from college with a BA in American studies.  The twenty-two year old had aspirations of working in television, but knew landing a job in that competitive industry would be a challenge.  She sent out resumes and made cold calls, but neither of those methods yielded success.  One morning, she decided to put on her best professional outfit-a blue blazer, a blouse, and a bowtie- and find a job.  She hopped into her family’s cream-colored Buick station wagon and headed down to the ABC News bureau in Washington D.C.

Despite her prior efforts to earn an interview at ABC, she was ignored by the deputy bureau chief’s secretary.  So she went down to the bureau in person and asked the security guard if she could see the deputy bureau chief.  When he learned she did not have an appointment, he chuckled at her and said she could not see him at this time.  Not easily defeated, she asked if she could use the phone in the waiting area, dialed the operator, and asked, “Can you connect me to David Newman, the executive producer of World News Tonight?”  He answered his phone, and she explained to him that his twin brothers went to high school with her sister.  She also told him that she lives down the street from his sister Julie.  Then, she asked if she could come up to the newsroom and visit with the deputy bureau chief.  Completely taken aback by her forwardness, he responded, “Sure, come on up.”

Still impressed, he dropped her off in front of the deputy bureau chief’s door as she walked right back the secretary who disregarded her calls and resume.  She told the deputy she was qualified to work for ABC and she could bring a unique skill set to the organization.  A few weeks later, she was hired.

This short story is a testament to the power of persistence and ambition.  Without taking action to make yourself stand out, achievement will be tough to attain.  You are bound to make a few mistakes along the way, but you will learn something by seizing opportunities.

Incidentally, the woman in the story is award-winning journalist Katie Couric.  The anecdote above can be found in her book, ‘The Best Advice I Ever Got: Lessons from Extraordinary Lives‘  

Pictures from Laguna Beach

Why do we love the beach?  Why, in the course of a conversation about vacation, does the beach inevitably come up?  Mom and I took a flight out to Laguna Beach on Monday, where we are staying for the next two days.  So far, we have encountered a number of unique individuals.  One man has operated a small oil painting shop for 24 years.  He spends his days painting images of the sea, waves, and his dog, Bailey.  We found an art gallery of a woman that accepted an invitation to paint Pope John Paul II.  Here are a collection of pictures from our trip:

What are Prediction Markets?

Many complex concepts in finance are not understood by the general population and prediction markets are one example.  The purpose of this blogpost will be to discuss the various characteristics of a prediction market and provide you with resources to learn further about this type of future contract.  Outside of one course taught by Dr. Koleman Strumpf at the University of Kansas, prediction markets are not taught in business schools across America.     

A prediction market is a version of a futures market in which the payoff depends on the potential outcomes of future events.  For example, a market might be created with the question, “What seed will KU receive in the NCAA tournament?”  Participants in the market can then bet on whether KU will be assigned a 1,2,3, or 4 or lower seed by the NCAA tournament selection committee.  Suppose when the market opens, probability of KU receiving a #1 seed is 25%, and you purchase a contract worth $25.  If KU ends up receiving a #1 seed, you will receive $100 because there is a 100% chance the Jayhawks will  have a #1 seed going into the tournament.  

Even if you don’t understand how prediction markets function, it is important to realize the ends for which these markets can be used.  Primarily, prediction markets are used to aggregate information and harness the “wisdom of crowds”.  Companies can use prediction markets to accurately forecast future events.  Participants in prediction markets are usually driven by the motivation of profits.  This profit incentive leads individuals to do research before purchasing contract.  Therefore, the generated information is generally accurate.       

In his book The Wisdom of Crowds, James Surowieki wrote about prediction markets and opportunities to harness the wisdom of crowds to make decisions.  Standard contracts in prediction markets are based on binary events in which something either will or will not happen.  Contracts can be written unknown future events in sports, business, politics, and basically everything in between.  The price a trader is willing to pay can be thought of as the probability an event will occur.  For instance, if a participants in a political prediction market collectively believe that President Obama has a 50% chance of being re-elected, the price of purchasing a contract for the President’s successful re-election will be $50.  

   

If you’d like to know more about prediction markets, you can read James Surowieki’s book The Wisdom of Crowds and read this blogpost from GeekCity.

Here's a selection of popular online prediction markets:

Intrade

Betfair

Iowa Electronic Markets

Why I Am Leaving Goldman Sachs Op-Ed

Yesterday, Goldman Sachs executive director Greg Smith resigned from his position and wrote an op-ed in the New York Times to let the world know the reasons for his decision.  Despite the immediate satirical response by comedians, Smith's opinion piece shed light on Goldman Sachs descent from the perspective of an executive.  Here is a selection of quotes that might catch your attention.  

"TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.  To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer." 


Even though only a select few individuals have access to the inner workings of investment banks, many Americans assume greed and manipulation are pervasive on Wall Street.  Why, then, did Smith's public resignation garner great levels of attention?  Smith has nothing to gain from rebuking Goldman Sachs.  He's already a mid-level executive who left his position of Goldman's US derivatives trading for Europe, the Middle East, and Africa.  His intention appears to be a sincere desire to confirm the widely held perception that the financial industry prioritizes profits ahead of customer satisfaction.  


Not surprisingly, a number of parody articles have been written overnight.  The most popular satire thus far is a piece from The Daily Mash titled "Why I Am Leaving the Empire".  In the article, a disgruntled Darth Vader expresses disgust with his employer:


“The Empire is one of the galaxy’s largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.”    


Minyanville writer Michael Comeau has also penned a letter to Goldman CEO Lloyd Blankfein called, "Why I Am Applying for an Executive Director Position at Goldman Sachs".


"Ultimately, however, I believe I have the right attitude for the job.

First of all, I am an awesome dude.

My proudest moments in life -- getting accepted to Brooklyn College, passing Intro to Chemistry, and competing in countless Wiffle-ball and roller-hockey games, known as the Brooklyn Olympics -- were achieved through pure awesomeness, with no shortcuts.

And more importantly, Lloyd, I know how to keep my mouth shut."

Speaker Review: Martin Jacques

On a recent Friday night, I found the free time to watch a TED talk by British economist Martin Jacques.  He eloquently examined the rise of China as a global economic force.  In May, I will be visiting China on a shortened study abroad trip organized by the Institute for International Business.  Here are the key takeaways from his lecture.  

China will continue to change the world

China’s population is 1.3 billion, and within a decade, it will have the largest economy in the world.  For the first time in the modern era, a developing country will have the world’s largest economy.  

We should not assume that modernity equates to Westernization.

China will remain very different than the West.  We should not attempt to understand China in Western terms. We cannot understand China by using Western concepts.  Attempting to comprehend China through a Western lense is the reason why we consistently misunderstand China. 

China is not a nation-state, but a civilization state.

In China, family, Confucian values, and role of the state are shaped by culture rather than the state.  China is enormous in terms of geography and population, therefore decentralized.  However, the most important political value for the Chinese is unity.  We were wrong about our prediction on the downfall of Hong Kong in 1997 because we had a nation-state mentality.  China consists of one civilization yet many systems.

The Chinese state

Jacques pointed out that the state is given a special significance as embodiment of Chinese civilization.  The government is viewed as patriarch of the family, and therefore, its influence is embedded in society in a different way that the West.  The state’s authority flows into the economy and public infrastructure.

Unlike the West, the power of the Chinese state has not been challenged for 1000 years.    

America must respond accordingly.

The world will be shaped by cultures we do not understand and are unfamiliar with.  Given the rise of China and India, civilizations and cultures that didn’t have a voice now will have representation.  

Guest Post: Melanie Bowen

Today, I’m pleased to publish a short piece written by Melanie Bowen.  Melanie is a part-time contributor on the Mesothelioma Cancer Alliance Blog and has dedicated her time to provide encouragement for those on the path to healing.  

Inspiration Accomplishment: Writing thoughts and desires

There are many people that find personal enjoyment in creating a list of events, places, things they want to accomplish in life. Creating such a list actually makes a lot of sense because it often helps people to push forward, especially in times when they may be feeling down in the dumps and need that extra push to keep moving forward. This can also be helpful for those who are recently struggling from a life threatening illness such as mesothelioma.

Creating a list of things to do is almost like setting up specific goals for one’s self because they will ultimately be working to complete each of these tasks throughout their lifetime. When an individual completes each task and is able to scratch one thing off of their list, they will gain a sense of accomplishment to make them feel like they can achieve much more. Creating a list can even help a person get through a grim prognosis; it can help an individual get past daily adversities they may emotionally, mentally or physically face when fighting an illness.

How to Create a List of Things to Do

Writing down ideas to complete within a lifetime is actually quite simple. First, the person who is making the list will need to decide how they want to document their hopes and dreams. Of course, a piece of paper and a pen can easily do the trick for creating a list of aspirations. However, for more motivation, one may want to begin blogging about certain things they want to achieve throughout their lifetime. A blog is not only a way for an individual to keep track of the things they want to do; however, it is a way for them to share their thoughts and ideas with other people who can help to keep them inspired. A blog with a list of things to do in life can also encourage other people to make a list as well so that they can make their life more meaningful too.

Getting Ideas of Things to Do

One problem many people face is that they find they have a hard time figuring out what it is that they actually want to accomplish. However, it is important for an individual to brainstorm and think of what exciting and different things they would like to do to improve their life and make it even more meaningful than it already is. It is important for an individual to think of how adventurous they truly want to be when making their list. There are lots of fun, exciting, and thrilling ideas that can be added to a list of things to do throughout life. Such things including riding on the back of an elephant, skydiving, learn an entirely different language, travel to different areas with just a backpack, go surfing, learn a new dance, study abroad or even learning to play a new instrument.

No matter what it is you chose to do within your lifetime, you are in the driver’s seat to finding personal success. Sit down and truly think about what will make life more meaningful for you and what it is you wish to become, experience and see throughout the world. Start with short terms goals and then begin to think about long-term dreams and aspirations. You may find that by simply blogging, journaling and creating a list of goals will improve the quality of your life and bring you more happiness than you ever thought imaginable.