Archive by Author | ckostikas

Social Networking

Social networking technologies can be used for businesses, as well as individuals, to communicate fast and effectively. More specifically, people from around the world can share their thoughts and work with the global community. The communication of ideas has never been so easy to achieve as it is in this age of technology. Independent artists, for example, showcase their work without having to pay a company to publish and distribute it. Ultimately, a collaborative community has emerged, and it serves as an outlet for people who may not have been given the chance to share their work without this technology.

Despite all the positive effects social networking has had on society, it has also had a negative impact. As people, specifically teens, become more exposed to social networking sites, they lose the ability to grow offline. As one New York Times article puts it, “Children used to actually talk to their friends” (“Antisocial Networking?”). Young people are losing the ability to interact with peers in person and are becoming too dependent on sites like Facebook.

Another issue with these social networking technologies is the impending battle on privacy. So much is posted online that it makes you wonder if any of it can truly be private. Even Randi Zuckerberg, sister of the founder and CEO of Facebook, has had problems with his privacy settings on the site. Her family portrait, which was meant to be private, was seen by even her public subscribers had access to it (“Facebook Privacy Is So Confusing Even the Zuckerberg Family Photo Isn’t Private”).

Eventually, companies like Facebook will have to deal with these issues, especially the problem with privacy.

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Bright Idea

Recently, the Solar Impulse, a plane entirely powered by solar energy set out to transverse across the Untied States. This project took roots back in 2003 with a 10 year budget of $112 million and now in 2013, Swiss pilots and co-founders of the project, Bertrand Piccard and Andre Borschberg, will take turns flying the plane. The project organizers say they aim to increase the awareness of green technology and boost worldwide support of renewable energy

According to one of the pilots, “I hope people understand the potential of this technology and use it on the ground,” Borschberg, who flew for the Swiss Air Force for more than 20 years and “If we don’t try to fly today using renewable energy, we never will.” Although the plane is still in its developing stages, when its completed, it will have a broad impact on the world because although electric cars exists, there has not really been any development of electric airplanes, which will further reduce our reliance on non renewable energy.

 

Written by Constantine Kostikas

Source:

http://www.reuters.com/article/2013/05/03/us-usa-plane-solar-idUSBRE9420E120130503

 

The U.S. Long-Term Unemployment Crisis Stumps Economists

While the unemployment rate has been dropping, the U.S. is still facing a serious problem with long-term unemployment.  Long-term unemployment was 3% in January, which is triple the 2001-2007 average, whereas short-term unemployment, which was 4.9% in January, was only 0.7% above its 2001-2007 average.  The level of short-term unemployment, therefore, is starting to return to normal levels, while the level of long-term unemployment remains higher than normal.  Economists are struggling to understand the cause of this problem, considering generous unemployment benefits, erosion of skills, and discrimination by employers as possible reasons.  Peter Diamond, an economist at the Massachusetts Institute of Technology, goes as far as to argue that long-term unemployment poses a larger problem than the national debt. Rand Ghayad, a Ph.D. candidate in economics at Northeastern University, sent out fictitious resumes to employers and found that the resumes of those out of work more than six months had a much harder time attracting employment offers.

This trend of high long-term unemployment should begin to fade as more jobs are created.  When employers are less picky with job offers, the long-term unemployed should have a better chance than they do today.  The only way this can be made possible is with economic growth.  Nonetheless, the fact that 38% of the unemployed have been out of work for six months or more is discouraging.

Written by: Constantine Kostikas

Source: Businessweek.com

Billionaires Suffer as Tax Shelters Go Away

Billionaires are having a hard time finding tax shelters to hide their money, as countries are making their banking systems more transparent and are even raising tax levels.  Cyprus, for example, is required by the European Union, as a result of the bailout, to tax bank accounts of more than 100,000 euros.  Singapore has also passed legislation that will make laundering profits from tax evasion a crime starting on July 1.

While many are pleased that billionaires will not be able to avoid paying taxes on large bank accounts, some argue that this crackdown will hurt the economies of these countries.  Businessmen will move their money to countries with more favorable policy, and a country like Cyprus can ill afford to lose investors as it is still experiencing economic struggles.  Also, at the prospect of attracting foreign investors, small countries do not overtax, which encourages investment and ultimately helps the international economy grow.

Written by: Constantine Kostikas

Source: Businessweek.com

The Federal Debt Is … Shrinking?

Although the U.S. debt is still outrageously high, a surplus is expected to be achieved over the course of this second quarter.  Tax revenue is higher than projected, and spending, as a result of the sequester, is down.  Unfortunately, the surplus won’t last for long, as the second quarter is generally the best of the year for balancing the budget.  The Treasury Department has predicted the borrowing of $223 billion in the third quarter.

Overall, we are seeing an improvement in fiscal policy.  The budget deficit as a share of gross domestic product fell from 10.4% to 6.7% between 2009 and 2012.  At that pace, it should fall to 3.7% in 2015.  Therefore, while the government has not completely solved the country’s debt problems, it is on the right track.  The fact that this should be the first quarterly surplus for the U.S. since 2007 speaks volumes about the progress we’ve made since the 2008 economic crisis.

Written by: Constantine Kostikas

Source: Businessweek.com

The Sequester’s Hidden Risks for the U.S. Economy

The sequester is already showing its negative affects throughout the country.  The across-the-board spending cuts, which took effect on March 1, have led to longer lines at airports and border crossings.  The decrease in staff at agencies like the Federal Aviation Administration could have serious effects on the economy, an unfortunate result that has been downplayed by the federal government and Wall Street.  The lack of flexibility of the sequester also poses serious threats. The terms do not allow funds to cross between different departments without special permission from the government subcommittees assigned to oversee the agencies.  Unfortunately, the situation is expected to worsen as lay-offs within these agencies must be accompanied by one-month notices.

The main question is whether or not these spending cuts will have a serious affect on GDP.  Some believe that the inconvenience of long lines should not be enough to have a significant influence on the U.S. from a macroeconomic standpoint.  On the other hand, there are those who disagree and, additionally, emphasize the severity of the 750,000 jobs cut by the sequester.

Written by: Constantine Kostikas

Source: Businessweek.com

Regulating China’s Shadow Banking System Isn’t Easy

Throughout China, private lending services are seeing clients disappear as a result of the “shadowing banking system,” which provides borrowers with black-market loans.  Government-sanctioned loan brokers were established by former premier Wen Jiabao after more than 80 businessmen in Wenzhou committed suicide or declared bankruptcy.  The goal was to match businesses in need of cash with private loans, draft loan contracts for the resulting deals, and monitor payments.  However, the plan has had very little success as so many Chinese citizens opt for the informal market route.  According to a survey, 90% of families and 60% of companies participate in the shadowing banking system.  UBS values the system at $3.4 trillion, about 45% of China’s gross domestic product.  Ultimately, because of the Chinese economy, which is growing at its slowest pace in 13 years, many find themselves unable to pay off their loans.

The Chinese government is calling for regulation and increased transparency of this market.  It is important for records on loans to be correct in order to determine accurate credit ratings so as to not mislead investors.

Written by: Constantine Kostikas

Source: Businessweek.com

Apple’s 10-Year-Old iTunes Loses Ground to Streaming

Ten years after iTunes made digital music purchases mainstream, Apple is losing its share in the digital music market.  Its market share has fallen to 63%, which is its lowest point since 2006.  It continues to sell most songs for 99 cents each, but consumers are showing preference for subscription-based music markets.  Some companies, like Amazon.com, which has seized 22% of U.S. music sales in the past several years, are even beginning to offer music for prices cheaper than Apple’s.  Apple has focused less on its music market, which was once known for giving undiscovered artists a chance at fame, and more on TV shows, movies, and books sold on iTunes.

Apple is looking at ways to improve iTunes, such as subscription plans and music streaming.  Since iTunes already has 435 million customers, all Apple should have to do is match competitors.  It is a trusted company with satisfied customers, so retaining business shouldn’t be too difficult for the company that is already responsible for so much innovation.

Written by: Constantine Kostikas

Source: Businessweek.com

In China, the License Plates Can Cost More Than the Car

The Chinese automobile industry is suffering largely because of the quota system the government has adopted.  In recent months, Chinese consumers have paid 90,000 yuan ($14,530) for license auctions.  The price for a license plate has exceeded the cost of cheaper cars that thrived in the past.  As a result, only wealthier consumers can afford to drive, and many of them prefer the cars of foreign automakers; more than 90% of cars in Shanghai are made by foreign companies.  The entry of local Chinese automakers into the industry was possible almost solely because of their cheaper prices.  Without the price advantage, they would not have been able to compete with foreign companies, but now they are facing a similar problem.  They must decide on whether or not they are able and willing to make more expensive cars in an effort to compete with the bigger Western companies.

The struggle that Chinese automakers will likely endure is sure to be an uphill battle because they cannot compete with foreign automakers.  Barriers to entry into the Chinese car industry are evidently high, and local businesses should be hit the hardest.

Written by: Constantine Kostikas

Source: Businessweek.com

 

Procter & Gamble Profit Up 6% But Its Forecast Disappoints

 The multinational consumer goods company, Procter & Gamble (P&G) revealed a 6% increase in profit recently. They were able to do this by cutting costs and other improvements in North America. This company has been trying to expand in countries such as China and India, but results fell short of expectations. They focused their resources on promoting popular products that would attract the general public. However, this came with a cost because they lost market share during the process. Currently, they are trying to cut costs from other divisions to further promote new products. P&G’s fourth-quarter profit has also been lower than Wall Street’s expectation due to instability within the market.

The increase in profit reflects an improving economy and various expanding markets. The company claims that the market is “choppy” because of inconsistent results. Although P&G was unsuccessful when expanding into emerging markets, it is still possible for them to promote products that do not have mixed reviews.

 

Written By: Constantine Kostikas

Source: New York Times

S&P’s Outrageous, Clever Fraud Defense

Standard & Poor filed to a motion to dismiss the U.S. Department of Justice’s fraud suit, which accuses the rating agency of forging ratings on investment options, resulting in the 2008 financial crisis.  The Obama administration filed the multibillion-dollar civil suit in February, and S&P has hired two of the best known attorneys in the U.S. for their defense.  The motion filed by S&P notes that other agencies like Moody’s and Fitch gave similar, often identical, ratings, and yet were not including in the lawsuit.  In response, the Justice Department has pointed out that S&P is the self-proclaimed “leading provider of independent opinions and analysis on the debt and equity markets” of the world.  However, S&P has responded by claiming that the statement is simply puffery.

This lawsuit should ultimately assign responsibility to the parties involved in the 2008 financial crisis.  Many blame the rating agencies for misleading investors, and S&P is the one that is front and center.  This case should create legal precedent for future cases, making it an important one for future government regulation.

Written by: Constantine Kostikas

Source: Businessweek.com

Falling Interest Rates in Europe Aren’t Great News

Because of the loss of confidence in European political leaders, interest rates have dropped drastically in countries like Italy, Spain, Ireland, and Portugal.  A couple of years ago, the high yields on government bonds in Europe were a sign that there was a belief that governments would default on their debts.  However, guarantees made by the European Central Bank to back the bonds issued by countries in the European Union caused a decline in interest rates.  Now, the interest rates have fallen because the economy is weak, thus people are less interested in borrowing money; yields on two-year notes issued by the Italian and Irish governments have fallen to the lowest levels recorded by Bloomberg.

While investors are beginning to lend money at affordable rates in countries like Italy and Spain, the guarantee made by the ECB makes this recent development less encouraging.  Unfortunately, bond rates don’t directly correlate to the “creditworthiness” of a nation, as evident by this situation in Europe.

Written by: Constantine Kostikas

Source: Businessweek.com

Why the U.S. Is Cutting Carbon Faster Than Europe

The European Parliament decided to make carbon cheap, rather than reduce carbon emission credits.  Europe has completely disregarded the reasoning behind the start of the emissions-trading system, as carbon has been traded for 3 euros ($3.92) per metric ton recently, which is significantly higher than the 2008 price of 25 euros.  On the other hand, the U.S. has seen a  12% decrease in energy-related carbon dioxide emissions from 2007 to 2012.  America’s investment in horizontal drilling techniques has led to the switch from coal to natural gas as a source of electricity.  As a result, U.S. coal exports rose 17% in 2012 and coal exported directly to Europe rose 23%.

A much as this is an environmental problem, it is safe to assume that Europe’s emissions-trading system has become a carbon emissions market.  The market is set to crash, and with prices as low as ever, businesses have no incentive to cut carbon emissions.  A future of sustainable energy consumption seems out of reach as long as these prices remain low.

Written by: Constantine Kostikas

Source: Businessweek.com

Why Foreign Banks Are Shunning American Millionaires

As a result of the Foreign Account Tax Compliance Act, some of the world’s largest wealth management firms, including HSBC Holdings, Deutsche Bank, Bank of Singapore, and DBS Group Holdings, are turning down wealthy Americans’ business.  They stand to lose a lot if they don’t comply with U.S. laws.  Non-U.S. firms that don’t abide by American regulations are subject to 30% withholding of dividends, interest, or the sale of assets made by them or their customers.  While many foreigns banks disapprove of these terms, for obvious reasons, American lawmakers maintain that the government should be tougher on offshore tax crime.

In order to avoid the taxes that must be paid when opening foreign accounts, some Americans are going as far as to renounce their citizenship.  Also, Canada should see an increase in American clients as the Royal Bank of Canada is one of only a few wealth managers with a Securities and Exchange Commission license and U.S.-compliant investment advice in Switzerland and London.  Similar banks should see an increase in American clients as well, and those that don’t have this feature may even create whole new departments to deal with American regulations.

Written by: Constantine Kostikas

Source: Businessweek.com