Does China Have a Real Housing Bubble?

Q1 home sales in Beijing, Shanghai, Guangzhou and Shenzhen dropped more than 40% this year from the same quarter in 2013.

Real estate is a huge driver of China’s GDP growth.Housing market contributes 33% of fixed-asset investment, equivalent of 16% of GDP. The decade-long housing boom has so far defied the bubble warnings, which began as far back as in 2007.

Is China’s housing bubble real? That depends on whether China’s surging housing prices are backed by speculation or a real lack of supply.

China has more than 160 cities with more than one million people and many hundreds the size of San Francisco.China added 787 million square meters of new residential floor space in 2013. There has been excessive buildout—that means the current supply is sufficient.

However, before 2000, affordable properties were in massive construction to be sold to poor and middle-class families. Those flats are small and often share kitchens or bathrooms with the entire floor. And these houses are mainly in downtown, thus convenient for people to commute. Families, counting on them to save money for fancier and bigger flats, find them unable to sell and waiting to be bought out by developers when the land parcel sells. At the end of 2011, around 47% of China’s overall housing is such “crappy legacy housing.” Experts estimated only around one-third of home owners are living in “commodity houses”—while others hang on social or legacy housing. That means China might actually have a housing shortage.

What’s more, China’s household registration system limits who can buy property where, distorting potential demand and supply balance.

However, some argue that with building around 13.4% more floorspace each year, China finally has too much housing. For each person that moves to a city this year, developers will build around 121 square meters of new flooring. That number was 113 last year.

People, especially those in first-tier cities—Beijing, Shanghai, Guangzhou and Shenzhen, buy property in the big metropolises as investments.

But the first-tier cities’ account for only 5% of housing under construction and sales—and only 8% of overall housing investment in 2013. This is comparable to US property bubble burst when property prices did not collapse in New York, but instead in places like Orlando and Las Vegas. In China, the true risks property market might actually lie in third- and fourth-tier cities.

Tensions on a Closer Economic Tie between China and Taiwan

Tens of thousands of people protested outside Taiwan’s Presidential Office Building in downtown Taipei last month, stepping up pressure on President Ma Ying-jeou to re-examine a trade deal with Beijing.

At the heart of the protests is the Cross-Strait Service in Trade Agreement signed between Taipei and Beijing last year. The deal, according to the Taiwan government, will help boost the economy by opening service sectors such as banking, health care and food catering to companies across the Taiwan Strait.

So what are the grievances? The most widely held complaint of the protesters is that the agreement passed with little public review. Protesters accused the government of “black box” and have dubbed campaign the Sunflower Movement, meaning sunlight and transparency.

The protesters were also worried China will exert more control over Taiwan’s economy and leave small- to medium-size enterprises in Taiwan struggling to compete. They feared that China’s efforts to absorb the island into its economy are a malicious scheme for ultimately reunifying straits. The main opposition party, the Democratic Progress Party, has been relentlessly against any moves to go closer to its giant neighbor even if on trivial things like allowing more tourists to visit Taiwan.

Resistance to the deal in Taiwan indicated that the Mainland’s strategy of trying to win Taiwan’s heart economically through closer economic ties may not be working.

After the Communist forces led by Mao Zedong won China’s civil war in 1949, Generalissimo Chiang Kai-shek fled to Taiwan with his defeated Kuomintang armies. For decades, hostilities between the Kuomintang government in Taiwan and the Chinese Communist Party led to a policy on the Taiwan side of “no contact, no compromise and no negotiation.”

China has long claimed Taiwan as a part of its territory, It fired missiles over the Taiwan Strait in 1995 and 1996 in response to President Lee Teng-hui’s call for Taiwanese identity. During the 2000-2008 reign of Chen Shui-bian, China frequently condemned him of is his Taiwan independence inclination. In 2005, China passed an anti-secession law that allowed the use of force in the event of a formal declaration of Taiwan’s independence.

After Mr. Ma took presidency in 2008, the two sides began signing a range of economic agreements including the landmark Economic Cooperation Framework Agreement (ECFA) in 2010. ECFA cuts tariffs on 539 Taiwanese exports to China and 267 Chinese products entering Taiwan. Two-way trade doubled since 2008, reaching $197 billion last year.

Beijing tried to use tariff cuts on half as many products from Taiwan to Mainland to appease opponents who warned that Taiwan will be flooded by cheap Chinese products with small businesses squeezed and jobs stolen.

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The Taiwanese government has said it believes the ECFA will help create 260,000 jobs and boost economic growth by as much as 1.7%.

Taiwan’s economy depends on trade, and China is its biggest export market and source of a huge trade surplus. China is central to the supply chains of Taiwanese manufacturers, and the destination to 80 percent of Taiwanese foreign direct investment.

Today, 118 airline flights fly back and forth between Taiwan and 54 cities in China per day, mainly packed with Taiwanese businesspeople mainland tourists. Seven years ago, such flights were banned.

There are also over one million Taiwanese working and living in China.

One of the biggest Taiwanese companies, Foxconn Technology, which assembles Apple products, employs hundreds of thousands of workers in Mainland China.

The service agreement centered in this event would open 80 Chinese industries to investment from Taiwan, while Taiwan’s side would open 64. In addition, Taiwan reserves the right to apply many barriers and restrictions. Mr. Ma said that was a sign that China was sacrificing more while Taiwan will be benefitted more in the deal.  He argued the deal would create 12,000 jobs and boost service exports by $394 million, nearly a quarter of cross-Strait trade last year.

Ma said, Taiwan, as one member of the “the Four Asian Tigers ”, has already lagged behind regional rivals like South Korea and Singapore and he warned that failing to pass the pack will impede Taiwan to enter other economic agreements, like the American-led Trans-Pacific Partnership.

Chen Deming, China’s chief negotiator in the trade talks with Taiwan, told Xinhua News Agency that he would be “deeply regretful” if the pact isn’t passed in Taiwan. He cited the huge complementarity of the two sides economies as the reason why the deal could be tremendously beneficial to Taiwan’s economy.

Merril Lynch forcasts Taiwan’s economy will grow at 2.9% if the bill passed and 2.55 of it’s delayed into next year.

Many experts argued that with China’s rapid rising in today’s world and Taiwan’s sluggish economy, It is increasingly harder for Taiwan to pay the price of ignoring its giant neighbor.

“The bottom line is that if the same deal was between Taiwan and pretty much any other country in the world it wouldn’t be a problem,” Jonathan Sullivan, an associate professor at the University of Nottingham’s School of Contemporary Chinese Studies told New York Times. “But Taiwan’s relationship with China is unlike any other in the world. And depending on who you talk to, China is Taiwan’s only way to peace and prosperity or an existential threat.”

“Taiwan’s service industry accounts for more than 60 percent of its GDP. However, Taiwan manufacturers got more opportunities in Mainland than service providers. That does not reflect Taiwan economy’s real balance,” said Xianghong Hua, an economic professor at the University of International Business and Economics. “ Then this pact is a perfect opportunity for Taiwan to adjust its investment structure in China, which is definitely mutually beneficial.”

In essence, Beijing, known as a tough negotionator, offered Taiwan a special deal that other countries would kill to get.

Chung-Hua Institution for Economic Research, a government think tank, said the agreement could add 12,000 jobs to Taiwan’s services industry, mainly in retail and storage sectors. It could also add around 0.025-0.034 percentage point to Taiwan’s gross domestic product.

In response to people’s ingrained anxiety about closer economic integration with Beijing, Taiwan’s government said it would earmark nearly US$3 billion to help small and medium enterprises survive or transform themselves against rising competition from across the strait

“Due to globalization and Taiwan’s maturing market, those SMEs are facing a tougher business environment whether there is a services trade pact with China or not. But they just don’t know how they will be assisted, of course they are against the deal,” Mr. Luo, an economist at Fubon Financial Holding told Bloomberg.

Some experts believe The Trade in Services Agreement will not benefit Taiwan’s services exports.

About 2.4 million of its 6 million workers are employed in Taiwan’s 1 million shops and services. Taiwan’s domestic services sector including local retail, printing, e-commerce, logistics, mass transport is in vibrant competition while China’s services sector is far more centralized, and subject to government regulations.

In addition, Taiwanese businesses already have far more access to China’s services sectors than any other foreign investors. However, Taiwanese investors in Mainland do not enjoy the same shields from arbitrary law enforcement, regulations and contract disputes as investors from other countries, which have embassies. Chinese investors, however, in Taiwan’s services industry can be operated in a modern democracy with a rule of law.

Taiwan’s banking institutions are too small and too competitive among themselves to have any structural impact in China’s financial services market. On the other hand, China’s financial institutions are all centrally controlled and have much more capital. The agreement gives Chinese banks and institutions up to 20 percent ownership in Taiwan counterparts, which will exert am effective control. But it is almost impossible for an y Taiwan  institution to have the same impact in China’s banking system.

Under the pact, investment threshold of $200,000 allows the investor to bring 21 new immigrants from China— three employees and up to seven family members per worker. That further inflamed Taiwan’s concern about the scenario of flocks of immigrants and small businesses being swamped.

Like the United States, Taiwan has seen thousands of good jobs move offshore, most of them to China. University graduates in particular complain that there aren’t enough decent jobs for them.

“They are stealing our jobs,” said Godwin Wang, an assistant vice president at Farglory Free Trade Zone Co., which provides air cargo and other services to importers and exporters. Farglory’s warehouse space by the airport is half full, he told Wall Street Journal days before the students took to the streets. “We are suffocating.”

However, China is not solely responsible for all of Taiwan’s economic predicaments. Taiwan has been hit hard by weak global demand since the Great Recession, due to the slow recovery in the United States and other large markets.

Many experts pointed out that Taiwan is hindered by structural weaknesses. Among them are excessive government regulation, the world’s lowest birth and a pattern of developing small businesses instead of giant corporations without giving them enough help.

Taiwan’s economic development paled in face of some of its faster-growing neighbors, especially South Korea.

In recent years, with the rise of global powerhouse companies such as Samsung and Hyundai, Korea’s economy has been far more dynamic, leaving many Taiwanese to wonder where they have gone wrong.

Nonetheless, many Taiwanese see China as the biggest, most immediate issue.

A poll conducted on March 20th-21st by TVBS found that nearly half of respondents supported the students’ action and opposed the trade pact. Only a fifth were in favor of the deal.

However, a free trade agreement is something unavoidable between Mainland China and Taiwan. Trade with mainland China is vital to Taiwan’s future economic development and future integration into the global economy. It is not possible for Taiwan to compete in the world without signing a lot of FTAs (free trade agreements), including (with) mainland China.

 

 

References:

http://www.bbc.com/news/world-asia-pacific-11275274

http://www.nytimes.com/2014/04/08/world/asia/concession-offered-taiwan-group-to-end-protest-of-china-trade-pact.html

http://www.bloomberg.com/news/2014-04-10/taiwan-students-to-end-24-day-occupation-of-legislature-today.html

http://www.bbc.com/news/world-asia-pacific-11275274

http://online.wsj.com/news/articles/SB10001424052702303978304579470552484527172

http://www.washingtontimes.com/news/2014/apr/1/tkacik-taiwan-struggles-in-chinas-grip/?page=all

http://www.businessspectator.com.au/article/2014/3/24/china/why-taiwanese-protestors-are-wrong-china-trade-pact

http://www.economist.com/news/asia/21599807-students-occupy-taiwans-legislature-protest-against-free-trade-pact-china-manning

http://www.nytimes.com/2014/02/18/opinion/taiwan-and-china-edge-ever-closer.html

http://articles.latimes.com/2014/apr/04/business/la-fi-taiwan-economy-20140405

http://thediplomat.com/2014/02/to-counter-beijing-japan-moves-closer-to-taiwan/

http://america.aljazeera.com/articles/2014/2/15/what-s-next-for-chinataiwanrelations.html

http://www.reuters.com/article/2014/02/11/us-china-taiwan-idUSBREA1A0EP20140211

http://www.forbes.com/sites/russellflannery/2014/05/04/a-free-trade-agreement-is-something-unavoidable-between-mainland-china-and-taiwan/

 

 

How Did It All Go Wrong For Best Buy?

Oh how times have changed. Best Buy, the consumer electronics company once renowned as one of the best companies in the early 2000’s, has gone from record growth to huge declines and stagnation. When one of its biggest competitors fell off in 2011, Circuit City, experts following the company have accused the company of lazy tactics, as well as a lack of innovation in order to stay ahead of the times. However, despite all of the talk of doom and gloom for the company, there is still belief that Best Buy can still turn things around as its share price hit $44 last November, a new high for the company. Sure, your neighborhood Best Buy may have closed in the past few years but that does not mean the company won’t see a brighter future.

But first, in order to properly understand how Best Buy can thrive in the future, we must examine how it got to where it is today. It all started in 1966 when founder Richard Schulze and his business partner opened an audio specialty store, with no emphasis on consumer electronics, yet. The first stores were all in Minnesota, where Shulze was from, and in 1970 Sound of Music, the name of the company, had made its first $1 million and had opened 9 other stores within the state (Wall Street Journal, 2013). Fast forward to 1983, and the board of directors of the company had decided to rename and rebrand the company as Best Buy, with the purpose of putting more of an emphasis on consumer electronics. This year was the turning point for the company as it also opened its first “megastore” that we have begun to know over the years. After this, the changes begin to steamroll quickly because is 1985, the company raised $8 million on its initial public offering on the Nasdaq (Wall Street Journal, 2013). Along with its debut on the New York Stock Exchange in 1987, the company sought to transform its stores by having stores that were not cheap and dimly lit. Along with this change in the nature of their stores, the company did away with the practice of paying their salespeople on commission, in an attempt to rid the work environment of questionable sales tactics like we see at car dealerships across the country. Just five years after the company hit the New York Stock Exchange, it made its a first $1 billion in annual revenues (WSJ, 2013.) Fast forward to 1999, and we see the successful partnership with Microsoft that saw the two companies cross-promoting products, and just a year later Best Buy was added to the S&P 500 index.

As 2000 came, the company began to see many changes that began with the succession of Richard Shulze, the company’s founder and long time CEO. He was taken over by Brad Anderson who had been apart of the company for many years. Along with this theme of change and reaching new heights, Best Buy opened its first international store in Canada, along with their acquisition of Geek Squad in 2002 (TWICE, Alan wolf, 2002). Another international acquisition took place occurred in 2006 when they bought the Chinese based appliance retailer Jiansu Five Star Appliance, and the company opened its first stores in China the year after (Businessweek, 2007). Before most of these acquisitions of international companies and their subsequent emergence in the international market, in 2004 Best Buy was named “Company of the Year” by Forbes, a recognition that this was once one of the most well run companies in the United States (Forbes, 2004). In 2009 Best Buy became the first third-party company to sell Apple’s iPhone as well as its purchase of Napster in 2008, as the company was thinking of entering the music selling market, as it had already begun to sell musical instruments (Reuters 2009). But in 2010 is where things stet to get tricky for the consumer electronics giant.

In 2010 Best Buy had opened 11 store in the United Kingdom to further their goal of having an international presence. But in a bizarre move in the following year, Best Buy closed those “U.K. big-box stores and paying $1.3 billion to buy out its partner in U.S. mobile-phone retailing as the electronics giant retools its struggling business to focus on smaller shops” (Bustillo, Wall Street Journal, 2011). At this point in time, the company could be described as having a “recession”, if it were a government, instead it is a mightily struggling company trying to figure out how to turn around “five consecutive quarters of sales declines at stores open at least 14 months, already closed big-box locations in China and Turkey earlier this year as it reins in capital investment” (Bustillo, Wall Street Journal, 2011). But this was just the beginning of the avalanche of bad news that the company had yet to announce. The next year, 2012, Best Buy announced a “$1.7 billion quarterly loss and outlines a plan to move away from the big-box strategy. The company says it will close 50 large stores in 2012 and test remodeled store formats in San Antonio and Minneapolis, while adding hundreds of small stores focused on selling cellphones. It also discloses plans to lay off 400 workers as part of a plan to trim $800 million in costs” (Wall Street Journal, 2013). For whatever it’s worth, as a resident of San Antonio during the years of their “remolded store formats”, I have yet to step foot in the store, and I’m not sure if any of my generation have been frequent visitors either. But we’ll get to this later on.

In his 3 year reign as CEO of the company, Brian Dunn had experienced both some of the best and worst times of the company’s history, but to add to his misery the now ashamed  Dunn quite possibly took the company to a new low. When Dunn first joined the company as a salesperson, he slowly moved his way up the corporate ladder for 28 years until 2012 when he resigned due to the criticism that he was “not moving quickly enough in the face of online competition” and as a result, “Director Mike Mikan is named interim CEO until a replacement is found” (Wall Street Journal, 2013). However, the controversy did not stop there. In internal investigation was released later that year where “an internal probe finds that he [Schulze] didn’t alert other directors that his handpicked successor as chief executive, Mr. Dunn, was allegedly having an inappropriate relationship with a female employee” (Wall Street Journal, 2013). Over the next year Shulze, who was still the company’s biggest shareholder, looked to buy out the remaining shares in the company in an attempt to take the company private, but newly appointed CEO Hubert Joly nixed the deal and the company remains in a struggle to find itself in an ever evolving marketplace for big-box retailers.

But how did it all go wrong for the “ultimate showroom” electronics retailer after many years of sustained success? First of all, many of its products that it sells are easily bought online with the click of a button, which further curtails the company’s pride in their showroom experience and excellent customer service track record. Some experts who have followed the company over the years that, despite its success against its former competitors like Circuit City who have gone by the wayside, the company has struggled to innovate and too sure of its own position in the marketplace. With the emergence and growth of Amazon, who sells essentially the same products as Best Buy and then some, Best Buy hasn’t coped with this evolving and changing scenario. As Al Lewis of the Wall Street Journal aptly states, “the electronics retailer’s critics have been calling this a deadly idea for years: Customers go to its giant stores to play with its toys, then they buy them somewhere else, sometimes using a smartphone before they even leave the floor” (Lewis, WSJ, 2014). Recently, after a dismal holiday period for the company resulted a whopping 28% slump in the stock price after they reported total revenue had slid 2.6% (Lewis, WSJ, 2014). This should not come as a surprise as a company the way Best Buy is structured would see its employees working more hours during  the holiday period, but still not seeing more sales. In essence, a higher operating cost with no benefit in terms of more sales of products.

But just exactly how Best Buy crawls out of the dark hole of irrelevancy that it is currently is a more difficult question to answer. One idea that has been tossed around is the idea of irrelevancy in terms of the number of stores. For example, Best Buy currently “maintains a total of 1,512 in the U.S. and another 489 around the world” (Rosenblum, 2013), which is an astonishing number when you think about the cost of overhead in maintaining these stores along with the employees. But its not just a fewer amount of stores that could help alleviate the company, they also need to invest in their website so that it can compete with the likes of Amazon in regards to its ease of interface navigation. After going to the Amazon website all it takes is a few clicks, sign into your account, and your package will arrive in the next three to five business days. But the investments should not stop there. Along with fewer stores and a better website, Best Buy has to capitalize on its physical advantage that it has on its competitors rather than simply try to be like them, because you are not Amazon. Meaning the company has to multiply its efforts in offering the customer the best experience possible, and that does not just entail great customer service. It means hatching out a store layout, something they have toyed with over the years, to where people know where they can easily find the product they are looking for compounded with a knowledgable employee who can tell them about the shiny new gadget that you absolutely have to have.

Sure, there is a lot of work to be done for Best Buy but that does not mean big-box retailers like them cannot survive in today’s world. The good news is, there is a lot of room for improvement and that it should maintain the stance that the company has already seen the worst of it and better times are to come. All of the listed improvements for the stores certainly are not too much to ask for, and despite the tribulations with the scandal, and cover up with former CEO’s, Best Buy can play an important role in the future as it tries to find a balance between the likes of Wal-Mart and Amazon.

 

Sources: http://online.wsj.com/news/articles/SB10001424052702303465004579324992775153208, http://www.forbes.com/sites/paularosenblum/2013/08/12/can-best-buy-survive-and-are-its-problems-really-all-about-amazon/, http://www.forbes.com/sites/lauraheller/2011/09/19/where-best-buy-went-bad/, http://online.wsj.com/news/articles/SB10001424052702304299304577350223835262792, http://www.twice.com/news/news/best-buy-wraps-future-shop-deal/22591, http://online.wsj.com/news/articles/SB10001424052970204554204577023320303430402, http://journalistsresource.org/studies/government/municipal/impact-big-box-retailers-employment-wages-crime-health?utm_source=JR-email&utm_medium=email&utm_campaign=JR-email#

 

Money, Markets and Money, Money, Money

Money. Just saying it feels good. It rolls so smoothly off the tongue that come close to the “-ey”, you just want to scream “monAYYYYYYY.” It’s why this class has been my favorite class. I love telling people

“Yeup, my class has got the word money in it. I know, pretty cool.”

But in all seriousness, my understanding of money was naïve to say the least, before I took this class. I never understood the real value of money –only that I had to spend it wisely and have a lot of it. So, it wasn’t until after taking this class, JOUR 469 (or 467), I finally began to understand the real value of it.

It’s quite funny when I think about the fact that it was on my first day of class I learned that all the value (gold) that money(US) once had, was gone. I wondered how in the world this country could run on money with imaginary value. My professor explained that if you close your eyes, click your feet and just pretend –voila, it actually began to make some sense.

I started by becoming very conscious of money. Knowing where all these imaginary dollars went — grocery stores, Starbucks, liquor shops and Panda Express. I thought that if the Treasury lost the value of the dollar, then I might as well make my own value for it. So I did. But I always came to the same conclusion: that money was merely a form of exchange to receive some beneficial service. Also, that I could never have enough of it, because I was (and am) always running out of it.

Money then began to sink its feet deeper into my mind and put me deeper into desperation. In distress, I thought to myself: why should money hold so much power over our daily lives? The truth as I came to see it, was that every single person was on the borderline of being in debt. A single dollar had the capability of being the tip of the ice berg into debt while also being the single source out of it.

We all have the ability to live within our means, but it’s the option of being abundantly wealthy that drives our motivations and inspirations into the heavens or drags it into hell. And that’s what I mean by being borderline in debt: money holds more value than gold or imagination; it holds our decency as people.

If out of a blue day a coffee shop decided to raise its price for a small coffee by a dollar, you best believe people are going to be upset. Not just because they have to give more for that same cup of coffee, but because now they receive a little less for $3. Yes, Mr. Treasurer needs to back the dollar, but Jerry isn’t worried about that. He’s worried about his job, his family and his survival.

Now imagine in sequence all the people in the world who can’t afford clean food and water, the people who are hundreds of thousands of dollars in debt and then those who can’t afford to get educated. For them debt is something their born into and it only continues to grow as they resort to harder ways to become wealthy.

Now imagine myself. A guy, who at one point knew just as much as nothing about money, but is lucky and fortunate to get an educated understanding this money driven world a.k.a. globalization. . I’ve landed quite a handsome debt in dollars, but it holds no bearing on the infinite value of living in a world that relies on money. Which is why education should be above all else and never to be restricted or exploited by the role of money. Money if imaginary only relies on the will of the people and therefore assumes the responsibility of empowering the people, not the other way around. If we are to continue living in this world controlled by money, then education should be at the very least free, accessible and without debt.

Through all the pain for a bigger gain, for a wider eye and a better mind, I’ve enjoyed this class thoroughly.

Thanks,

The Cost of Tuition is for What?

Every year the cost of tuition goes higher and higher and yet I have personally never understood why tuition is high as it is (USC). My mama always told me to get the bang out of the buck and always figured that his made the most absolute sense, –so shouldn’t universities, institutions handling millions of dollars, be doing the same? Maybe that’s just the uneducated and confused, yet hopeful and concerned citizen talking in me. But, man wouldn’t that be nice.

Take my school for example. We have a cafeteria, two libraries, five parking lots, 23,653 employees, million dollar club fund raisers, $35 million donation from Dr. Dre –etc.. Now some of those things listed do make a profit and some don’t, but regardless I believe that USC has all the possibility and even responsibility to utilize these things in a way that runs the school as efficiently as possible. Obviously USC has to pay the 23,653 employees so they pay those who work for the school and allow them to feed their families, pay the bills etc.. Or maybe, NOT.

Featherbedding. It’s a word I just learned today. It means having more employees than needed. Without a doubt, this school has killed a lot of birds (). But it’s not just employees –it’s facilities, programs and organizations that are funded by the university. Who gives the university $40,000 each year? Me, damn it. Am I being crass? Well, I’m sorry if I feel that my money should be used more efficiently to provide me with a return more comparable to what the leaders of the institutions are receiving. The leaders are people who I refer to as the teachers, the administration, USG, counselors, –the utmost needed people to protect and serve the ideals of an efficient institution.

The thing here is Jerry, that man Nikias, President of USC, takes home at least a million dollars and that’s where I’d like to be, see? That’s why I’m paying this school (Sallie Mae* actually) and I will not feel apologetic for not willing to pay for services, programs and organizations that I have no interest in and provide no benefit. Would you do that? See the problem here, is USC along with many other schools have become less transparent in connecting tuition (investment) to returns. Tuition now includes payment for school concerts, construction, celebrity appearances etc.. And frankly, I could care less for all of that, but god allows for differences and so I’m sure there are people who love seeing Jason Derulo and Diplo, which is … fine. But tuition, like any other transaction, should only be to pay for the service—the education, and all those who service directly to provide it.

If you’re getting the picture Jerry, what I’m wondering is, why can’t universities do away with all of that and simplify their financial obligations towards a way that makes everyone happy? Happy means lower tuition, more savings –oh, I do pray that’s what Walmart had in mind.

“Tuition is expensive, school is hectic and the future is a blurring. So let’s simplify the picture and look at it one frame at a time.”

– Willis Parker

Sallie Mae* – A formerly government sponsored enterprise that that assists in the furthering of college debt

China’s Twitter–Weibo Launched IPO

Sina Weibo, China’s version of Twitter, debuted on the Nasdaq exchange on April 17 with a 19.1 percent jump, the eighth-best debut for a U.S. listed tech stock this year.

Weibo shares rose from the subscription price of $17 to as high as $24.28. The company sought to raise $380 million by selling 20 million shares for as much as $19 each. But underwriters could only find demand for 16.8 million shares at $17, generating $287 million for the company.

Weibo, launched in August 2009, is China’s largest social media platform with 144 million active monthly users.

Though it remains unprofitable, losing $38 million last year and another $47 million in the first quarter of this year, its revenues jumped to nearly $68 million for the three months.

The Shanghai-based Weibo was missioned with a fundamental challenge: progressing from a microblogging phenomenon in China to an important member of the international social media industry.

As Weibo celebrates Wall Streets’ s welcoming waters for it, it’s always at conflicts with censors at home, putting in doubt whether the firm known as the “Twitter of China” may eventually be dismantled by government interference.

A series of detentions of influential online commentators may have hurt Weibo’s user numbers. A study released in this January by Britain’s Telegraph newspaper and East China Normal University in Shanghai showed that the number of Weibo posts have fallen 70 percent since its peak in 2012, after the government required users’ real names before posting content.

Chinese government stipulated a series of policies – requiring real names on social media in early 2012 and introducing new laws prohibiting “rumor-mongering” last September – after the Facebook- and Twitter-fueled Arab Spring protests swept through the Middle East.

However, the opportunity for Weibo remains tremendous with China’s more than 600 million Internet users. But people argued that the harsh online censorship in China could hurt Weibo’s healthy growth, especially as it competes against Wechat— the mobile messaging app launched by rival Tencent Holdings Ltd that has became increasingly  popular in part because it is private by nature.

The China Internet Network Information Center, a state-run agency tracking Internet statistics, said in its annual report released in January that while growth in Weibo dropped 9 per cent in 2013, mobile messaging services witnessed explosive growth, with apps such as WeChat adding more than 78 million new users.

 

 

The Fight To Bring Down College Tuition

As the expense of college increases, with a seemingly less significant return on investment, students and parents have started to question if it’s really worth it.

 

After a huge surge in tuition prices over the last 30 years, higher education costs are slowing very slightly (Quartz)

After a huge surge in tuition prices over the last 30 years, higher education costs are slowing very slightly (Quartz)

Graduates still earn more than those with only a high-school diploma. Former college students aged 25-32 who are working full-time still earn about $17,500 more than their counterparts without degrees, according to the Economist. But still, 42% of graduates are in jobs that require less than a four-year degree, and 41% of graduates from the nation’s top universities could not find jobs in their field. These are shaky outcomes for an investment that will set students back as much as $60,000 a year.

In some ways, the college bubble is similar to the housing bubble, which came crashing down in 2007. Poor risk assessment played a role in both situations. Homebuyers were able to obtain a loan that they had no way to repay. And students’ parents are co-signers for their loans, which makes it hard to determine the ability of the actual borrower to repay the debt. Also, both big houses and a college education exist as part of the American Dream to the national collective: everyone has a right to a home, and an education is an investment one cannot afford to pass up.

Companies such as Upstart, Pave and Lumni have developed a plan to reduce student debt: they are giving future scholars the option to sell “stock” in themselves rather than obtaining a traditional loan. Two congressmen, Marco Rubio (R-FL) and Tom Petri (R-WI) have introduced legislation that could make this process more legitimate by setting out its terms, according to Slate Magazine. Their Investing in Student Success Act defines the maximum length a contract can last (30 years) and puts a limit on the future income a student can owe (15 percent). The debt is paid off each month in proportion to students’ earnings, so the amount they owe for a particular month depends on their salary at the time. Their ‘worth’ as an investment package depends on factors such as standardized test scores, job prospects and credit history. But although this method was designed to breach the inequality gap, the students that look like the best investments are usually the ones who grew up with more opportunities. To take this into consideration may result in another conflict about affirmative action, which would mirror the debate going on in colleges today.

Alan Collinge founded nonprofit StudentJustice.org after struggling with his own loans.

Alan Collinge founded nonprofit StudentJustice.org after struggling with his own loans.

Although this method addresses a way to avoid future debt, new graduates are already facing loans that they don’t have a way to repay. To help this group, the nonprofit organization Student Loan Justice is pushing to have the bankruptcy law changed to put restrictions on how and for how long lenders can chase debtors. Currently, student loans are more difficult to expunge in bankruptcy proceedings than credit card debt. Since it was founded in 2005, the nonprofit has gained a large social media presence with chapters in all 50 states up on Facebook.

 

 

 

The Olympics: Not All It’s Cracked Up To Be

the-stands-of-the-kayaking-venue

The Olympic games are becoming increasingly more expensive to host. The final operating cost for the 2008 Beijing games was $40 billion, compared the $15 billion spent on the previous Olympics in Athens. In the 1980s and ‘90s, the cost was even lower. The spending for the 1992 Barcelona games topped out at $9.5 billion and the Seoul Olympics cost the government $4 billion.

But for all its investments in sporting venues, security and housing for the athletes, host countries are not experiencing much long-term gain. Sochi was the most expensive Olympics to date, but the Russian government has no plan for the village. It is out of the price range of middle-class Russians, and the wealthy can easily fly to more established tourist locations such as Europe for skiing or the Turkish beaches in the summer. The venues from the Athens games are crowded with weeds, and the stadium in Beijing is now little more than a Segway track for tourists.

olympic-games-cost

So why do countries continue to fight for it? The Olympics exists in popular imagination as a utopian ideal. Every government competing for the bid seems to think their country will prove the exception to the trend. Some nations use the games as an opportunity to revitalize a bad part of town, such as London and Atlanta. In Atlanta, the effort was largely a success; but nothing really changed for the neighborhoods surrounding the renewed downtown area. They are still considered an urban blight. The British government claims that the $15 billion investment paid off, and cited a study conducted by a team of consultants as proof. But according to NPR, the government funded the study, and Max Nathan, an independent economist in London, said it’s too soon to tell if hosting the Olympics paid off in the long run.

highway-freeway-São-Paulo-traffic-Living-in-Brazil

Highway to Sao Paulo airport

Already the 2016 Games in Rio de Janeiro are facing some roadblocks. Brazilians protested the amount of government spending on the Olympics and the upcoming World Cup when education and health-care are suffering. Construction projects are also running behind schedule due to a shortage of skilled workers. And the roads and airports are insufficient to handle an influx of tourists, according to the policy journal Americas Quarterly. For example, visitors are already recommended to leave their hotels five hours before flights from the Sao Paulo airport, due to choking traffic and long lines at the airline counters. Athens suffered from similar problems with infrastructure but was able to pull together an international airport and walkways for pedestrians that had been in the works for 15 years. Like the ancient city before it, Brazil may pull off a great Games, but it remains to be seen if its economy will fall to a similar tragic fate.

 

 

From Roach Coach to Gourmet: The Rise of the Food Truck Industry

Growing up, my mother, who worked at a Quincenera shop in the historic fashion district, always took me and my brother with her to work. I remember the streets of Pico and Maple lined with taco trucks, or loncheras, during lunch hours. People used to call them “roach coaches.”

Now, you often see food trucks lined up in front of corporate buildings during lunch hour to serve white collar workers. Now they’re referred to as “gourmet food trucks,” serving up trendy fusion cuisine for a fraction of the price.

Latin Burger

Latin Burger

Sushi Burrito

Sushi Burrito

Korean Hotdogs

Korean Hotdogs

I don't even know what this serves.. but it looked cool.

I don’t even know what this serves.. but it looked cool.

How did this crazy make-over happen?

The recession following the 2008 financial crisis created an increased demand for quick quality food on a budget. Trailblazers like Chef Roy Choi revolutionized the industry when he introduced the iconic Korean-Mexican tacos. Kogi was founded in 2008, right at the beginning of the recession and right after Choi was fired from his cushy job at Rocksugar. The business struggled at first, but by 2009, Kogi had 36,000 Twitter followers and generated 2 million dollars mostly off of $2 tacos. People were waiting in 2 hour lines to get a taste.

Aside from the food being delicious, the key secret to the rise of Kogi was social media. The only way people could track down Kogi was through Twitter, and with Choi’s zero marketing budget, social media became a powerful weapon to spread the word. Today, there are thousands of “gourmet” food trucks that run Los Angeles. These new emerging food trucks are serving the demand of the new privileged poor consumer.

However, some people believe the food truck craze is getting out of hand, turning into a mini-bubble in its own right. Hiller says the scene has become too saturated with inexperienced band-wagoners without culinary backgrounds. In addition, the increased regulations and higher prices are creating new barriers to entry. High demand for food trucks has driven the leasing prices way up since “everyone is doing it.”

Food truck culture is spreading across the US to cities like New York and Washington D.C. It will be interesting to see whether food trucks are just a fad or the real deal. Want to learn more? Here is a cool infographic that sums it all up.
truckinfographic

Beef, It’s Not For Dinner

Maybe you haven’t noticed a change to the offerings at your family dinner table or the prices at your favorite restaurant, but meat prices have skyrocketed recently mainly due to droughts in recent years in Texas, America’s biggest state for cattle. Experts have cited the most devastating drought Texas ever saw in 2011, the driest year the state has experienced. But 2011 wasn’t the last of the drought, as Texas has experienced several other less severe droughts since as well as the rest of the southwest region. When adjusted for inflation, the price per pound for ground beef has hit $3.55, a 56% increase from just 2010. This drastic weather has dramatic reprecussions that all of America is now facing.

 What this drought means is that feed prices have gone through the roof, which in turn means that cattle ranchers are now forced to raise fewer cows. So, less cows being raised, that surely isn’t enough to see the highest prices for beef in 30 years is it? But there are more problems causing these prices increases, mainly due to emerging countries and economies like China who are now eating more beef. Meaning, the decrease in product (cattle) is corresponded with new, emerging economies. David Anderson, an agricultural economics teacher at the University of Texas A&M explains the surge in demand for emerging economies like China “One of the things that happens that we see in people everywhere: When their incomes go up the first thing they do is they upgrade their diets, and so that usually means eating more meat.” 

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When you look at all of these factors in play, it’s a simple equation of a shrinking supply, higher demand, translating into record-level beef prices. But it’s not just beef that is seeing prices climb, according to CNN all other cow products like eggs, milk, and butter are being effected as well.

With the grilling and barbecuing season about to begin, you might be seeing more chicken, pork, or fish instead of those tasty cuts of beef, as it looks like these record prices are here for the longterm. Experts are predicting that high demand overseas will stay at a constant, so unless California, Texas, and the southwest region see some unexpected summer rain, be careful before selecting your protein.

Sources: http://www.npr.org/blogs/thesalt/2014/04/14/302858835/drought-increased-demand-contribute-to-high-beef-prices

http://money.cnn.com/2014/04/14/news/economy/beef-prices/