Archive for the ‘Grow Page’ Category

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Meet Adam Blake, the Young Prince of Real Estate

Wednesday, November 24th, 2010

TILE showed up for part of the Global Student Entrepreneur Awards at the New York Stock Exchange this October, and we met some young folks who made us feel bad about sleeping through college.

Adam is just one of them. He was THE Global Student Entrepreneur of the Year in 2005, because he figured out how to turn a simple off-campus housing need into a multi-million dollar real estate business.

But… why? Well, we asked him:

Watch the oh-ficial GSEA 2010 recap video here. To see all our GSEA interviews, click here.

Competitive Culture = Cutting Corners?

Wednesday, November 24th, 2010

U.S. officials have been snooping around and raiding the offices of certain hedge funds recently, and there seems to be a cultural connection between them all…

  • Many of the hedge funds being investigated for insider trading were started by former traders for SAC (a private investment management firm).
  • SAC allow its employees to trade small amounts of company money once they’re hired, and if they do well they’re given more power. If they don’t do well, they get the boot.
  • This competitive culture creates a tension – SAC traders want to succeed professionally but don’t want to join Bernie Madoff in the clink for all eternity. Sometimes, the best intentions can land you there anyway.

Facts & Figures

  • SAC employs 800 people, including 20 lawyers and other nitpickers charged with keeping things in line with regulation
  • Level Global Investors LP and Diamondback Capital Management LLC, two hedge funds started by former SAC traders, were some of the first to be raided by federal agents
  • Richard Choo-Beng Lee, another former SAC employee, pled guilty to insider trading last year

Best Quote

“That eat-what-you-kill culture is highly competitive. A set-up where you have traders running their own portfolios instead of feeding into a centralized investment may make it more tempting for them to cut corners.” – Craig Lilly, an attorney at Greenberg Traurig LLP

U.S. Companies Sitting On Piles Of Cash, Not Hiring

Wednesday, October 27th, 2010

Where did all the money go after the recession hit? Well, some of it appears to have gotten stuck at the top of the consumption chain...

  • Moody’s Investor Service reported this week that U.S. companies are “hoarding” almost $1 trillion with no intention of expanding business or hiring new employees.
  • The future of the economy is still unclear, so these companies are likely holding out on growth activities until they can be sure of success.
  • During the economic crisis, many companies cut costs, downsized, and sold corporate bonds to raise the cash.

Facts & Figures

Current cash holdings, by sector:

  • Technology – $207 billion
  • Pharmaceuticals – $124 billion
  • Energy – $105 billion
  • Consumer Products – $101 billion

Best Quote

“We believe companies are looking for greater certainty about the economy and signs of a permanent increase in sales before they let go of their cash hoards, which they suffered so much to build.” – Moody’s Investor Service report

omg i just maxed out my ira!

Wednesday, October 27th, 2010

They say lifelong habits start early. But what does that mean when it comes to sharing financial information on social media sites? See the full report here (in a new window).

young-adults-money-habits.png

(via visualeconomics.com)

Group Of 20 Wants The World’s Currencies To Stay Steady

Monday, October 25th, 2010

It doesn’t make sense at first, but sometimes countries actually want their currencies to be worth less. Of course, if everyone tried to do it at the same time, disaster would ensue…

  • The G-20 – a group of financial leaders from 19 nations and the European Union – met this weekend in South Korea to discuss economic policies related to global economic stability.
  • One of the goals of this meeting was to encourage countries to end “competitive devaluation of currencies.” Devaluing your country’s currency makes it cheaper for other countries to buy from you, and more expensive for your citizens to import goods from other countries. This can boost domestic production and export profits. When a country devalues its currency, other countries often do the same so they can remain competitive in the export market.
  • Both China and the U.S. were singled out for recently devaluing their currencies. Though the G-20 hasn’t set up specific regulations and wouldn’t have the power to enforce them if it had, the hope is that public shaming will keep finance ministers around the world in line.

Facts & Figures

  • China is currently taking in 4% more money than it is expending, reflecting a favorable balance of trade.
  • The U.S. is spending 3.2% more money than it is taking in, indicating a trade deficit.
  • As of Monday morning, one euro was worth $1.39, and one dollar was worth 81.31 yen.

Best Quote

“I want the market to value the fact that we were able to forge a certain level of agreement.” –  Yoshiko Noda, Japanese Finance Minister

U.S. Taxpayers Actually Profit From TARP

Friday, October 22nd, 2010

The mere mention of TARP sends many people into grumble-mode, but the emergency measure to bail out large financial institutions has actually turned the government a profit.

  • The Troubled Asset Relief Program traded banks much-needed capital in exchange for partial government ownership.
  • Now that two-thirds of TARP recipients have paid the money back, the government has seen a profit of about 8.2%. That’s more than the return on any U.S. Treasury bond, high-yield savings account, money-market fund, or CD.
  • Despite the return on investment, the public is not happy about TARP. Several politicians have lost primary elections this year because they voted in favor of the program, and authorities say the return rate is misleading because it doesn’t take into account the other costs of the bailouts.

Facts & Figures

  • The government has earned about $25.2 billion so far on $309 billion in TARP investments.
  • The return rate on 30-year Treasury bonds averaged 4.1% during the last two years.
  • Over the same period of time, high-yield savings rates averaged 0.36% – 0.92%.

Best Quote

“From the perspective of the taxpayers getting their money back, TARP has been a great success. But there are other costs as the government made it possible for the banks to pay back TARP. Those costs can turn out to be larger, and their legacy could last longer.” – Todd Petzel, Chief Investment Officer at Offit Capital Advisors LLC

UK Tackles National Debt By Taking An Axe To The Budget

Wednesday, October 20th, 2010

It’s bold, it’s risky, it’s the 2011 United Kingdom budget!

  • Britain has been hit as hard as the rest of the world by the global economic crisis. Now it’s following the lead of some other European nations by tightening the tap of government spending.
  • The spending plan, unveiled today by Britain’s top finance minister, represents the deepest reduction in public spending since WWII. It’s a much more serious spending reduction than any other Western nations have attempted so far.
  • Groups opposed to the plan say it is too severe and will interfere with employment and stunt growth. But the budget deficit facing British lawmakers is too big to ignore.

Facts & Figures

  • Britain’s deficit is 11.5% of its economy. The U.S. deficit is 10.7%, and the German deficit is 5.4%.
  • The plan involves significant cuts to welfare, public sector jobs, and local government budgets. The retirement age will also be raised from 65 to 66 four years earlier than planned.
  • The average reduction of each government department’s budget will be around 19%

Best Quote

“We have had to make choices, choices in the things we support. We have taken our country back from the brink of bankruptcy.” – George Osborne, Chancellor of the Exchequer

China Is The Biggest Buyer Of U.S. Treasury Bonds

Monday, October 18th, 2010

When you hear about the U.S. budget deficit, do you think about bond holders in China? Maybe you should…

  • For the second month in a row, the Chinese government is the biggest foreign holder of U.S. Treasury bonds – bonds issued and backed by the U.S. government.
  • A report called TIC (“Treasury International Capital”) tracks sales of American securities to foreign buyers. It’s one way of seeing how easily the U.S. government can attract foreign investors when it needs to raise cash.
  • In the rank of foreign holders of U.S. Treasury bonds, Japan comes in right behind China.

Facts & Figures

  • China’s Treasury bond holdings total $868.4 billion.
  • Japan’s holdings total $836.6 billion.
  • In August, private foreign investors bought $85.5 billion in Treasurys. In July they purchased $21.4 billion.

No Increase In Social Security Benefits For 2011

Friday, October 15th, 2010

No cost-of-living increase, no COLA.

  • In 1975, a system was set up to automatically increase Social Security benefits so that recipients (elderly and disabled Americans) could keep up with the cost-of-living increases brought about by inflation.
  • At the end of 2010, the Social Security Administration decided to cancel automatic cost of living adjustment (COLA) because the inflation rate (usually around 3%) was too low to justify it. Now the SSA has decided to cancel the increase for 2011 as well.
  • Despite low the inflation rate, many Social Security recipients have lost money on their retirement investments and the value of their homes.

Facts & Figures

  • Social Security provides benefits for 58.7 million Americans.
  • In 2009, the COLA reached a 27-year high of 5.8%.
  • The average monthly Social Security check is $1,072.

Best Quote

“We’re a little bit upset because our bills are going up and our Social Security isn’t.” – Betty Dizik, 83, Retired Tax Preparer and Social Worker

The Real Value Of A Falling Dollar

Wednesday, October 13th, 2010

The value of U.S. currency has gone down nearly 10% against the euro in the past three months, but the impact on exports, tourism, the price of oil, and foreign investment may not necessarily be as bad as it seems…

  • When the value of the dollar falls, it means that $1 is worth less compared to one unit of another form of currency. So if $1 was once worth 1 euro, a fallen dollar might be worth only half a euro. That makes U.S. dollars cheap to euro-holders, and euros expensive to dollar-holders.
  • A cheaper dollar means that U.S. goods are more attractive to foreign buyers, so exports will likely rise. Since many American companies make a good portion of their profit outside the country, this could be a significant boost to the economy. A weak dollar is also an enticement for foreign tourist to visit the U.S. and spend lots of euros and yen!
  • The price of imported goods is going to increase. Of course, this could just encourage Americans to drive domestic industry by purchasing more affordable American-made goods. But not every product can be duplicated domestically.

Facts & Figures

  • In 2009, foreign tourists in the U.S. were responsible for $120 billion in revenue.
  • In July, an 8GB iPhone selling for $99 would have cost an Italian customer 78 euros. Today it would cost only 71 euros.
  • If they cashed out now, investors in the Euro Stoxx 50 index would be up 17% from 3 months ago simply because of the change in the dollar’s value.

Best Quote

“International finance isn’t pretty. If everyone focuses on exports, it’s a race to the bottom in exchange rates.” – Aroop Chatterjee, Currency Strategist at Barclay’s Capital

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