Monday, February 23, 2009

And So the Naiveity Continues

Short post this week, too stressed with finals, I wanted to leave a longer post about Terrorism and an excellent article I found about it, however I was so enraged by this week's events that I needed to say something.

First off, Someone please tell me why I seem to know more than Economic Professors, Teachers, and Journalists, Politicians, and of course business bankers!!!!!!

I'm getting ahead of myself lets back up a second. My story begins two years ago (keep in mind I was 17 and a junior in high school) as I was reading in the Economist about the current state of things and started noticing huge potential problems. This problem became the now well-known Subprime mortgage crisis. I realized right then that this new crisis where all sanity was lost in pursuit of short-term profits could sink our economy.
Granted I was wrong about the method's it would take, and being naive failed to understand the full complexity until I had conducted more research, however I did pickup on the fact that not only would this crisis crush our ballooned housing market and finally pop the false bubble that our lovely ex chairman of the federal reserve created to stem the losses from another ill conceived bubble. I rightly predicted that this would hurt banks and being very interested in the field figured that this would kill private equity, which at that time was actively engaged in turning around failing businesses (Chrysler).
My reasoning was that Private Equity required a massive amount of credit and leveraged debt to make their acquisitions and if the banks can't afford to lend them the money well then there would be no saving actions. As I previously mentioned I was naive and did not figure out the scope until a couple of months later, but I did predict a sort of credit crisis like the one we have found ourselves marred in today.
So over the next months I watched closely as the major banks Citi included took write-down’s totaling over $100 billion dollars and how much their over exposure to these investments had hurt the companies. I assumed others had paid attention to these articles as well, I was foolishly mistaken. So along came Bear Stearns and investor panic started forcing one company after another into what should have been bankruptcy. But no, our fading president had one last gift to us.
The president and his former hedge fund boss that now ran the Secretary of the Treasury considered the investment banks to large to fail and orchestrated a rescue selling these failing banks into and I quote as the newspaper's put it a "SAFE BANK". Who was this safe bank, JP Morgan and Chase. Now this process continued until the strategy became clear that the way out of this credit crisis and recession. (By the way I've been saying we are in a recession since last summer) So one by one failing businesses were absorbed by the only "safe banks" until we arrived with around four major banks controlling most of the investment and banking system.

Fast-forward to October, I attended a panel sponsored by RIT featuring economic professors from RIT, UofR, and other respectable organizations. Make no mistake these were educated, intelligent professionals. I listened to their opinion on the crisis and heard little to nothing new. There was the now redundant speech about how mortgages were sold as securities, rubberstamped by the bond companies and sold to corporations as secure securities. The panel continued explaining how the government had to intervene to save Bear Stearns, and by this time Merrill Lynch, AIG, the list goes on but I think you get the point. Finally it was question time and I got right up in front of the microphone and asked my simple, common sense question, Why are we assuming that these "Safe banks" who have had billions in write downs are equipped or even stable enough to handle these toxic assets? The response well they are safe and it has to be done. I wouldn't take no for an answer so I went up to the speakers and talked to a very bright Professor and Writer, about my fears. He explained to me that there was really no chance of these institutions failing.
WAIT am I Hearing this right Citi faces the prospect of Nationalization today, and I saw this coming when the experts didn't. Dear God, we are screwed.
This brings us to today and I have to say I am enraged, even more so than when the first bailouts were announced, we bailed out these companies that purposely structured their company's growth around risky short term investments, that were not only foolish but dangerous, and we have provided TRILLIONS of dollars to these same failing companies. WHAT???!!!
I just have to say I am extremely disappointed with the current situation and irritated at the doomsday talk of now two administrations that offers but one solution. I really would like to know what are your parameters for success of these bailouts because so far we have hundreds of billions of dollars un-accounted for and those same companies are still asking for money.
There is however a bright spot. Bank of America has started paying bank the interest to the federal government on a loan they received. Maybe we can have one "safe bank."

Eric Morel

Wednesday, February 11, 2009

Time to Applaud the ICC

The warrant has finally been issued and it should be carried out. Omar Al Bashir has demonstrated his complete indifference and lack of empathy for the genocide in Darfur, which if foreign intelligence is to believe he has orchestrated and managed, and furthermore with his appointees and cabinet positions given to members of the JanJaweed has provided more evidence of his unwavering resilience and defiance of the international community. Bashir deserves to be tried by the court. For further information here is an essay I wrote last year that details the complexity of the problem.
(Keep in mind that this was written in the spring so the part dealing with the Olympics is outdated, however the rest and the part about the UN mission is still unfortunately accurate.)

What does the Olympics, Oil, China, Warren Buffet, and the first ever trillion dollar company, have in common? The answer is not a trick question in fact it can all be summed up with one word that ties together these five things. For over fire years now the most inhumane and brutal conflict has engulfed the western region of Sudan. The scope of this conflict is so great that the US congress passed a unanimous bill declaring it genocide. Due to the muddied intelligence that Khartoum has provided the death toll has been placed at between 200,000 and 400,000 with some groups claiming half a million people have died. This would seem like a perfect place to use the saying “history repeats itself”, however this genocide is different from the one that ravaged Rwanda a decade and a half ago. It is more complicated than just one group attacking another, because of the various rebel groups involved. It started when the Sudanese government armed the Janjaweed militia unofficially to combat the threat that it felt the various rebel groups posed to its government. This was an ill-informed and poorly thought out idea, especially considering the fact that the Janjaweed have been known since the 1990’s for their intense hate and several massacres involving brutal killings and rapes. However instead of fighting the rebel groups the Janjaweed instead launched a war against civilians and aided by the Sudanese government have continued to bomb, gun down, and burn, hundreds of thousands of innocent refugees, and civilians.
In a few months the world will huddle around TV sets and flock to Beijing for what is to be the main showcasing of China for the entire world to see. China hopes to display itself as a world leader and a powerful nation, with a successful economy and a proud heritage. To accomplish this China has invested upwards of 30 billion dollars into making stadiums updating transportation, and promoting the 2008 Olympics. China not only plans on making a huge multi billion dollar profit from the 08 Olympics but also has staged the Olympics to show the world the “real” China, the China that has evolved from the brutal days of the Tiananmen Square Massacre, into the world economic power that it has become following those dreadful Communistic years. This is China’s hope, but if the world unites under this proposed plan China could face serious problems. Hosting the Olympics is always a risky business. In an age where the internet and video games have stolen profits from TV and Radio; the Olympics have been struggling to remain the huge attraction that it has always been. As has been proven by past recent failures the hosting city does not always make a profit, sometimes they are launched into deficit. This was the case with Athens and could well be the case of Beijing.
So where is the connection between the Olympics and Sudan? Well, Sudan has paid for this genocide with money that it has made from its oil exports, and the number one buyer of these exports buying over 2/3 of all oil exported is China. China has consistently funded the genocide indirectly by its massive importation of Sudanese oil. In addition to the oil funding the genocide china also sells nearly 2 billion dollars of armaments to countries around the world, including Darfur. The company directly responsible for dealings in Darfur is China’s state run PetroChina Corporation which at its initial public offering (IPO), it managed to become the world’s first trillion dollar company.
Warren Buffet is seen as one of the most generous men in this world, and indeed he is. However his company owned which he controls over 33% of owned over 1.3% of PetroChina, which translates into over 3 BILLION DOLLARS! After activists targeted him and his company he sold nearly all of his shares and PetroChina’s value fell over 40%. This is proof that it does not necessarily take an army to stop genocide. Despite this finding it will take and army one that the UN-and AU have assembled that will be the largest humanitarian relief operation in the world. This mission has encountered enormous difficulties so far as both China and Russia kept vetoing the mission, and then Sudan has interfered and even attacked troops. As of today the mission has been deployed but its success is still hampered by massive amounts of opposition being levied against it by China, Russia, and Sudan.

For more information check out this activist website
and the official website of the UN’s mission
and for a comprehensive overview

So to wrap all this up, I am tired of hearing that if we arrest Omar Al Bashir Sudan will descend into civil war between the South and the North. The fact is, is that the treaty is working and the S. Sudanese government has asserted control and stayed out of Darfur's conflict. Yes, there is the controversy the Somali pirates uncovered with the weapons shipment, but overall I feel that the argument for not arresting Bashir because it will plunge the country into civil war, is not only groundless but is counterproductive

By: Eric Morrel

Do marketers know what their commercials are supposed to accomplish?

So over the past couple of months you may have noticed a new commercial featuring two guys with a guitar singing a catchy rock song. The commercial is designed to encourage people to visit the website And the lyrics of the song provide evidence as to why one should go to the site. So far the spots have featured knights, pirates, renaissance fairs, and valet attendants. The ad is done well, it is catchy its got favorable reviews the singers are actually comedians; it has YouTube hits and numerous blogs quoting. The ad has even made it into popular late night TV, with mentions by Stephen Colbert and other comedians. The jingle is well-balanced countering the message with the site, and avoiding over jamming the site name down a persons throat. So what is it that I do not like about this ad? The problem is this ad seems to be targeted to GenX and GenY consumers, however rather than offering a free product and creating an ad to drive traffic and promote the parent company the ad simply says at the end "offer applies with enrollment in triple AAA advantage enrolment". Am I missing something you are directing young people and potential customers to a website and then telling them that they need to buy an insurance with your company in order to use this service. This is the problem the advertising agency has crafted a well-done ad that promotes the service and entertains, however the service they are selling is poorly organized and wrongfully targeted. Love to get your feedback on this one, I did some research and Adweek has not done any reports so I can only speculate as to how successful this commercial is in terms of revenue, however as I have pointed out I highly doubt that it has accomplished for AAA what it was intended to.

Monday, February 2, 2009

Chechnya, Russia and WHAT!

So I came upon this article, and I got to thinking about two different things. The first is that it is well known that Putin, (current leader by all measures), rose to power and popularity by brutally repressing, and destroying, the Chechnya Insurgency. This article fits perfectly in with the time line, and despite the fact that they did not mention it, it is kind of clear that Putin would of put this butcher-er, president, in charge of Chechnya. So this got me to thinking, how could the West be so naive to believe that we could turn a person like Putin simply with Capitalism? The idea's of Capitalization have wrongfully been mixed with the idea's of liberalism. The second observation I notice is that Russia is largely regarded as the greatest threat to the United States, them and China, and with the exception of the brief eight years that the Bush administration distracted the world with the idea that Terrorists were our greatest threat, most politicians and academia agree that Russia, and China are our two greatest threats. The thing I find interesting is that China may not be as big of a threat as we have previously estimated at least not in the short term. My feeling is that Russia is going to be extremely dangerous because if my prediction is right it will follow vaguely in Iran's footsteps. Iran became a threat after flirting with Capitalism and watching the market destroy their economy and prop up a corrupt and ruthless leader. From there the Islamic Extremism and Nationalism took over, and the rest is history, with the exception of N.K. few nations despise and distrust the west so much.

The problem in Russia is not that their leader is raping the population, however Russia has become a nation deeply invested in Capitalism and due to failures of it's own and the current collapse of the world's financial system and conversely a devastating downturn in the Capitalist market, Russia is being set on a path, that could prove challenging and dangerous for the United States. Russia's economy foolishly built on oil, has crumbled and the lack of divestment has forced Russia once rich Oligarchs to surrender to the Government as the state attempts to save the economy via a Nationalizing Agenda. The danger lies in the fact that the State, Russia, now inherits a modernized and efficient industry and because of its current history with Capitalism, it appears that Russia is backsliding into its Nationalistic Communist self. The recent events and undertakings that the Russian government has enacted, (Georgia, Ukraine Gas, NATO Missile, Darfur, Iran, Radiation poisoned Spy's), have only added further evidence that Russia has taken a more combative stance with the West and have sought to further Russia's interest above all. Fueled by his popularity Vladimir Putin has effectively set up a system where he has the final say, and is the main orchestrator in all of Russia's actions. So to conclude my thoughts, it is wise to learn from this article, two things, one that Russia under Putin has no limits as to the brutality it will employ to achieve its ends. The second is that Russia is a threat and that balancing that threat diplomatically will become crucial within the next few years, and Russia's power needs to be limited, it is simply unacceptable that Russia can literally bring the EU to it's knees via it's power over natural gas and oil.

The last thing I noticed in an unrelated manner is how underreported Islamic rebellions are against Repressive regimes. Western Media has all but ignored the plight of the Uyghur’s and Chechnya is mentioned just as rarely. Throw this in with the coverage of the current Palestinian conflict and a trend emerges. This is not to say that these rebellions are any better or that their methods are acceptable, rather it is being said to shine light on the disproportionate attention and sympathy the west dedicates. For further reference consider the way the West reacted to Tibet during China's Olympics, when it was clear that the events were not peaceful and were actually an anarchic battle waged