Self-Reflection

Dear Reader,

This will be the last entry for my blog and also a finish for my financial media subject. It will be a self-reflection of my development during the last twelve weeks of the course and the eleven entries that I made in my blog.

                                                                     (Source:wordpress)

Starting from the beginning, I must say that I never followed or let alone wrote an own blog. The thought to write a critical blog about the media coverage of different journals and newspapers, seemed to be really difficult.

During the lectures we learnt some interesting theory about the different writing styles that newspapers use. Additionally we observed that journalists mostly add their own opinion to the stories, which they are covering, to address the regular readers, who are purchasing this particular newspaper to read the opinions.

Before I attended this course I was reading news mainly from two sources, which were the Frankfurter Allgemeine and the Wall Street Journal. However during the course I started to look at other media coverage’s and sources. To follow the different stories I started reading the FT, Economist, Business Week, Spiegel and Handelsblatt, which I all included for my blog research.

It was interesting to see the difference in coverage of one story.  I recognized that the political views of the newspapers influenced the style and the view of the news. I observed that the newspapers used different quotes and different authorities and people to interview for same story covered. At the beginning I had difficulties finding this kind of differences in the story, but with the time it became very obvious in which direction the writer was trying to take the reader Therefore I developed new reading skills, which allowed me to have a clear view when analyzing news from different papers.

I can say that I really enjoyed writing the blog and I think it was a nice opportunity to enter the blogging world and being a continuous follower of different stories covered in the media. Additionally I think it was a good tool to understand the importance of critical media analysis and the connection of the media to financial topics.

I hope I created a read-worthy blog, which was trying to share some interesting articles covered in the media during the last twelve weeks, also integrating my own opinion and comments to them. It was a nice experience to learn how to use the internet to spread my opinion by using the blog as a form of communication. I believe that I developed my research and commenting skills especially through the weekly research on different topics in detail.

To conclude, it has been an exciting practice and a challenge for me to write this blog, as it was my first time to use this gadget.

Thank you all for following my blog,

E.V.

The Bloomberg HQ Visit

Dear Reader,

This blog entry will be about our financial media class visit to the Bloomberg Headquarters. Our lecturer Mrs. Linda Lewis arranged a guided tour through the building, including a demonstration on the Bloomberg Terminal. I was really looking forward to this event, as I am interested in doing an internship in this company.

The first thing that caught my eye during the tour was how modern and structured the different floors in the company were. It was explained why every floor was designed in different colours, which I found a really interesting approach. Blue, Green, Yellow and Red are the colours that I remember, that were allocated to the different departments. I think blue was to create a calm atmosphere for the stressed traders.

(Source:Hintmag)

Another aspect that was differentiating the inside of the building from other companies that I visited, was the huge aquarium on every floor, with around 600 species building the biggest collection of fishes in Europe. Mr. Bloomberg’s affection for fishes was not to be overlooked. Talking about unusual things, it was interesting to see that the company is recycling electronic parts to built chairs, tables etc.

During the tour we were lucky to see a live TV appearance of Judith Bogner (Pic Below), who I recognized, because I saw her moderating the Bloomberg news a couple of days earlier . The technology on the set was really impressive. I did not know that the company has different cameras in important buildings to announce breaking news in the same second as they are spoken out.

(Source: Businessinsider)

At the end of the tour we were gathered in a room to get some insights of the Bloomberg Terminal, which is the core product of the company. I personally used the terminal once in Uni, but I found in really complicated to get useful information out of it. However after the presentation I was really impressed by the amount of the information that is provided by this terminal. The possibility even to track tankers on the golf stream to predict the oil price movements or to observe the oil spill of BP was amazing to see. The “Dine” function was a highlight that I found really employee friendly.

(Source: Businessinsider)

Finally we had a meeting with one of the HR managers, who presented some historical background and the job opportunities in the company. She explained us that the structure of the company was "flat" meaning that everyone was sitting at the same desk. The design of the floors contributed to this argument by not having walls, which were deviding the rooms, but "glass walls" where everyone could see what was happening at all times. Even the executives offices covered with "glass walls" demonstrating the equal treatment of every person in the company.

The visit ended in the cafeteria, which provides the Bloomberg employees with free snacks and beverages. The fact that there was no seating area provided was as I think to keep the breaks as short as possible.

Overall it was a nice experience to get some insights about Bloomberg and I can say that I really enjoyed this excursion.


E.V.

"It is about survival"

Dear Reader,

This week I will cover an article that concerns the EU.

The European Commission, the European Central Bank and the IMF are in a discussion with the Irish and Portuguese governments to resolve the EU’s financial turmoil.

Ministers from the 16 Euro-Countries are gathered to meet and discuss the situation this Wednesday.

The aim is to question Portugal and Ireland of how they are planning to get out of their current debt crisis, which is the reason for uncertainties on the bond market.

(Source: esharp)

The EU is in the brink of another Greece-style bailout….

(Source: FAZ)

…the European Unions President Van Rompuy is very troubled

Based on his speech in the Parliament in Brussels he sees the Union in a serious “survival crisis”.

He highlighted the increasing splits in the zone, with Ireland resisting to accept aid and other countries in debt like Spain and Portugal are publicly pushing Dublin to get to an agreement soon to calm down the markets.

On the other hand other countries, also including northern members who have been more responsible in terms of financials, are increasingly frustrated about the pressure from the ECB of being placed on Ireland.

However one of the representatives of the parliament underlines that Ireland does not necessarily requires financial aid, because of the difficult budgetary situation they are in.

Dick Roche responsible for European Affairs agrees and stresses that – “After the ECOFIN-Meeting everything will be seen more logically”.

He adds that: “There is no reason to accept aid from the IMF or the EU, there is definitely no problem with the banks liquidity”.  

In my opinion it is important that all members work together now, to get through the current turmoil. The Unions future could get in serious risk. As also Van Rompuy states:  “We all have to work together to survive, with the eurozone, because if we don’t survive with the eurozone, we will not survive with the European Union.”

We will see the results of the ECOFIN Meeting next week.

Sources:

1. FAZ

http://www.faz.net/s/Rub0E9EEF84AC1E4A389A8DC6C23161FE44/Doc~EC07F41345CB243EF89BD9F5D0341ACD2~ATpl~Ecommon~Scontent.html

2. EU Observer


http://euobserver.com/9/31281

PS.

I found some additional Information about my contribution to Mr. Zoellicks announcement:

World Bank President Robert Zoellick speaks at the Development Committee news conference during the annual IMF-World Bank meetings in Washington October 9, 2010

For more info please refer to the link below

http://news.yahoo.com/nphotos/World-Bank-President-Robert-Zoellick-speaks-Development-Committee-news-conference/photo//101108/ids_photos_ts/r1186710520.jpg//s:/nm/us_gold_zoellick

And I did some research about the results from the EU summit:

It took a long time. The debates at the EU summit were hard. But after eight hours of white smoke rose and cleared the way for an unprecedented restructuring of the monetary union. Chancellor Angela Merkel and President Nicolas Sarkozy were able to prevail themselves - partly.

For more info please refer to the link below

http://www.spiegel.de/international/europe/0,1518,726103,00.html

E.V.

Bretton Woods II

Dear Reader,

One of the most discussed topics in recent weeks is the high uncertainty in the worlds currency market, also titled as the currency wars.

The world economy is showing clear signs of global imbalances in world trade, caused by the financial crisis. Since financial institutions are getting back on their feet, the focus shifted to even more serious problems – countries increasing public debts.

The President of the World Bank, Robert Zoellick raised his voice last week and made a plausible suggestion concerning the debate, he argued: “Leading economies should consider readopting a modified global gold standard to guide currency movements.”

(Source: FT)

To be more precise, his idea proposes to involve the dollar, the euro, the yen, the pound and a renmibi that moves towards internationalisation (adopts to the market conditions) and then an open capital account.

According to Zoellick, this system should also consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

A successor is needed, and he calls it “Bretton Woods II”.


I found an interesting video, where Zoellick explains his plans explicitly (please refer to http://www.youtube.com/watch?v=okJdmy5TSRo)

The key players in this discussion are the U.S, China and the EU. The U.S. is accusing China of holding down their domestic currency to maintain the dominance in exports. Additionally it blames other countries for contributing to global account imbalances and creating capital market distortions. On the other hand Germany’s finance minister criticises the US Federal Reserve’s decision to pump another 600 billion dollar into the financial markets. He argued that: “It is not consistent when the Americans accuse the Chinese of exchange rate manipulation and then steer the dollar exchange rate artificially lower with the help of their central bank’s sprinting press.”

World Bank President Zoelicks view underlines the importance of the debate and suggests a change in the system, which could replace the failed 1970 Bretton Woods agreement on fixed exchange rates.

I agree with Mr. Zoellicks suggestion introducing a new system or reform the old one.  The extent of changes in the market since 1971 are immense, therefore I think it is eligible to consider changes in the Bretton Woods arrangement. Although Gold is considered as “old money” from many economists, markets are mainly using it as an alternative monetary asset nowadays.

(Source: GoldPrice.org)

Additionally the gold price hit a record high of 1389 Dollars the ounce, mainly influenced by the move of the Federal Reserve ($600bn). Another criticism to the US could be the decision making in isolation. This kind of decisions should normally be done in extreme cases and in consultation with other states.

On Thursday the G-20 Summit will be held in South Korea, where the subject of currencies will be covered. 

E.V.

Sources:

1. NY Times

http://www.nytimes.com/2010/03/15/business/global/15yuan.html

2. FT

http://www.ft.com/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html

3. FAZ

http://www.faz.net/s/Rub0E9EEF84AC1E4A389A8DC6C23161FE44/Doc~E4033511125C7438CB3714019F2246802~ATpl~Ecommon~Sspezial.html

4. FAZ

http://www.faz.net/s/Rub0E9EEF84AC1E4A389A8DC6C23161FE44/Doc~ECDDF0BE161E446A5BC9163DC2460056D~ATpl~Ecommon~Scontent.html

Lisbon Amendments - The FrancoGerman Plan

Dear Reader,

This week I will report about the biggest economic debate in past 3 days –

The EU Summit in Brussels.

The assembly in the capital of Belgium fuelled a new debate about amendments in the Lisbon treaty, which is effective for not even one year. Especially two countries are pushing the plan to rewrite parts of the treaty.  The demand to tighten the EU rules on national debt is mainly coming from Europe’s most influential countries Germany and France. Both Chancellor Merkel and President Sarkozy are urging other European leaders to accept the need for treaty changes, as the unsustainable debts in the euro zone pose a big threat.

(Source: FAZ)

The idea is to establish an automatic mechanism that would prevent any repetition of this year’s debt crisis in Greece.

The Change would bring sanctions for countries exceeding the limit allowed from the EU’s Stability and Growth Pact (SPG), which is – 60% of the gross domestic product (GDP). Therefore the sanctions in these countries would be tightened increasingly if the concerned ones fail to solve debt problems within months. A serious violation of the EU monetary rules would trigger suspension of the voting rights.

The Greece incident destabilized confidence in the euro currency also threatening the economic stability of other countries in the euro zone. The seriousness of this problem mainly triggered the debate about the amendments.

(Source: Toonpool)

During the crisis the European Union created an emergency fund of £386bn called European Financial Stability Facility (EFSF) to provide protection any member countries in the zone vulnerable to Greek type liquidity issues.

As the ESFS agreement only runs until 2013, the Franco – German plan is to introduce a permanent protection shield to avoid any “Greek-style surprises”, as the BBC Europe Editor of Europe Gavin Hewitt also stated. 

The European Central Bank chief Jean Claude Trichet warned the heads of Europe’s governments “A new rescue system that is designed for future Greece-style bail-outs could inadvertently drive up short-term borrowing costs, imperiling struggling euro zone debtor nations”.

(Source: Focus News)

In my opinion, besides of the warning of Trichet, there are other important aspects to mention. The debate for change is not popular under all the European countries.  Poland’s President Kaczynski for example stated that the idea of suspending a country's voting rights at EU ministerial meetings is "politically dangerous”.

In addition the European Union spend 8 long years to negotiate the Lisbon Treaty. Numerous obstacles and two refendums from the Republic of Ireland have complicated the process. To change or amend the treaty after not even one year and getting the approval of all 27 member states, I think will not be an easy task.  One statement will underline my argument as Belgian foreign minister Steven Vanackere said, "nobody around the table wants to open up the treaty and change it fundamentally".

I think the main reason why Sarkozy and Merkel are pushing that hard to change the treaty and wanting banks to play a bigger role in any future bail-out is that the bill for the Greece crisis proved to be very unpopular at the home countries as the taxpayers ware main participants for the aid packages. 

E.V.

Sources: 

1. Focus 

http://www.focus.de/politik/schlagzeilen/nid_56131.html

2. FT

http://www.ft.com/cms/s/0/cba1de4a-e37c-11df-8ad3-00144feabdc0.html

3. Die Welt

http://www.welt.de/politik/ausland/article10606338/EU-Gipfel-ebnet-Weg-fuer-Vertragsaenderung.html

China – Monopoly of Rare Earths

Dear Reader,

This week I read something, that I personally did not know. It is about the country, which is in the centre  of discussion almost every week – China.

We all know the growing importance and power of this country, but did you all know that this country has the monopoly of rare earths with exotic names like Dysprosium, Yttrium, Terbium and Neodym, which are essential commodities for the high-technology industries to produce Smartphone’s like our precious Blackberry’s and IPhone’s, hard drives, electric vehicles, catalysts and are also used in laser technology or wind turbines?

(Source: USGS)

To be more specific, China controls 97% of the worlds export of rare earths.

The country is cutting back the exports for this rare material for about 40% since the beginning of 2010. According to the government further restrictions are planned for 2011. Since the cutback prices for this precious material have risen tremendously by 2000%. This could be reflected on rising prices for high-tech products in the long term.

(Source: resourceinvestor)

China always knows how to use this kind of advantages for its own good….

…BUT the European Union, United States and Japan, who are mostly affected by this, are considering to interfere. Regarding to the WTO, China is breaking an important rule for global free trade - Setting export quotas are prohibited.

Especially Germany is really concerned about the situation, as the industry heavily relies on these rare earths.

In my opinion, China is seeking to use its monopoly position for political leverage. For example exports set out broadly to Japan in September, as the dispute between Beijing and Tokyo over the collision of a Chinese fishing boat with a ship of the Japanese Coast Guard in a disputed sea area flamed up. Germany accuses the country of using its dominance deliberately. “They are trying to keep the valuable material internally,” says Minister of Trade and Commerce Rainer Brüderle.

Most industries will be out of the rare earths very soon; therefore it would be of high importance that the WTO would intervene to prevent booming prices and dangerous conflicts between the most important industrial countries in the world.

(Source: WTO)

China doesn’t see any contradiction to the WTO rules primarily justified on environmentally protection and a consolidation of its raw material industry.

However, I think that this story will be coming to an end very soon, as China cannot afford this kind of conflict.  The government is already denying any definite plans to cut its export quota for the next year.

There is no such thing,” Jiang Fan, deputy director general of the department of foreign trade at the Ministry of Commerce, told Bloomberg News. “I haven’t heard any policy that China will reduce rare earth exports by 30 percent next year.”

E.V.

Sources:

1. China Digital Times

http://chinadigitaltimes.net/2010/10/china-reins-in-rare-earth-exports/

2. FAZ

http://www.faz.net/s/RubD16E1F55D21144C4AE3F9DDF52B6E1D9/Doc~E12C77B6A04F242EA8EE1D1C4693C1DC8~ATpl~Ecommon~Scontent.html

3. Japan Times
http://search.japantimes.co.jp/cgi-bin/nb20101020a1.html

Liverpool Takeover Sealed!

Dear Reader,

To have a bit of a variety, this week I decided to report on a story from the sports world. To be more specific – Football.

As I was following the FC Liverpool sale on TV and we mentioned this story a week ago in class, I thought everyone would be interested about the result of the negotiations.

Last Friday the US company New England Sports Ventures, owner of the Boston Red Sox, has completed its takeover of FC Liverpool.

After some complications with the former owners George Gillet and Tom Hicks, who had placed a temporary restraining order blocking the sale, finally gave in.

The lucky buyer of the £300m sale, NESV head John W Henry said: “I ma proud and humbled, I cant tell you how happy I am”

(Source: Metro)

Although the sale is over the table; Gillet and Hicks may now take legal action in England to secure damages after dropping a claim lodged in Texas. The American pair was claiming £1bn in Dallas, saying that the deal was “illegal and an “extraordinary swindle” as the club did not take the highest bid on the club. There are rumours that higher bids were rejected as the Club had previously promised an agreement with Henry.

(Source: SportsNews)

Tom Melsheimer attorney from law firm Fish & Richardson stated: We believe that once the English court finally has a chance to hear all the facts, a very different picture will be painted.

However, there was an air of relief as the news of NEVS completed the purchase emerged in the press. This move will now allow major creditors like the Royal Bank of Scotland to be paid the £237m it is owed.

A club statement revealed that this transaction will value the club at £300m and eliminates all of the acquisition debt placed on FCL by the former owners. Consequently the clubs debt servicing obligations will be reduced from £25m-£30m a year to £2m-£3m.

(Source: Dallas-Observer)

As a result Liverpool’s holding company is unlikely new to be put into administration, which would mean a nine point penalty for the football club in the Premier League, placing them in a relegation battle.

Henry, who was spotted inside the law offices of Slaughter and May in central London added: “We are going to do a lot of listening, we have a lot to learn, and we will walk this path together. “


In my opinion, the fuss about the change of the owner influenced the team tremendously. Now that this issue is finally sealed, the club can concentrate on football again. Having the worst start in the history of, it is placed 19th after 8 matches. Looking from an economic perspective, should this sportive dilemma continue the club will forfeit a huge financial loss, by not participating in any international tournament like the Champions League or European Cup. Worst case scenario would be, if the previous american double manage to put the club into administration, meaning a nine point penalty, creating the possibility of being relegated to the second league. Let's hope that this will not happen. 

E.V.

Sources:

1. BBC News

http://news.bbc.co.uk/sport1/hi/football/teams/l/liverpool/9094283.stm

2. The Guardian

http://www.guardian.co.uk/football/2010/oct/15/liverpool-sale-nesv-takeover-john-henry

3. Boston.com

http://www.boston.com/sports/baseball/redsox/articles/2010/10/16/henry_completes_liverpool_fc_purchase/