House Lashes Out at China

Will things get ugly between Untied States and China? I read an article in the Wall Street Journal that the U.S. is lashing out on China to raise the value of its currency. China is taking advantage on having a devalued currency because China can sell its products inexpensively with the intentions of profiting more. With America's weak economy, this is adding fuel to the fire. America's Secretary of Treasury Timothy Giethner has already threatened congressional action towards China. Even President Barrack Obama, has had a few choice words to China's regarding currency freedom and how is it affecting America.

However; Wang Baodong, the Chinese embassy spokesman in Washington, was dumfounded about the publicizing of the Chinese currency. He believes that this ordeal would divide the U.S and China on so many levels. He also stresses the importance of trade relation between China and the United States.  Nonetheless, Obama administration expects other nation to also pressure China into freeing its currency. It is already speculated that Europe and Asian countries have been complaining about Chinese currency practices.

Economist — Analysis

Most economists have drawn the conclusion that China is definitely benefiting from devalued currency. Let's take exporting for instance; since the Chinese currency is below its value, this gives China a huge competitive advantage against U.S. exporters. This also put tremendous amount of pressure on the American steel makers and machine-tool producers.

ALJ — Analysis

When dealing with currency, exporting, and tariffs, there are many variable that one may consider. For instance, how is it going to affect overall strategic and tactical planning on a country whether it is the United States or China. China has clearly taken advantage of having devalued currency. It is speculated that the Yuan is closely valued with the American dollar. If this is true, America has big problems considering the U.S. dollar is sliding tremendously. In addition, China is heavily invested into the United States by buying land and contributing funds indirectly to the government official banks.

America has to take small steps when its approaches China whether it is freeing its currency, disarming nuclear weapons, or congregating global plans. According to the Wall Street Journal, China holds 894.8 billion in U.S. security, which means that the majority of the U.S. debt is to China.  However, China agreed to buy some of the U.S. debt. The fact of the matter is that China needs the United States to buy goods and services; in order for the Chinese economy can continue to grow. Because the U.S. is in debt to China, how much pressure can the U.S. put on China to let its currency flow freely in the market?

http://online.wsj.com/article/SB10001424052748704116004575522401651849766.html?mod=WSJ_Markets_LeadStory

http://online.wsj.com/article/SB10001424052748704093204575216680676960908.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird

Citigroup Sheds Its Student-Loan Department

 Citigroup announced on Friday, September 19, 2010, that the company was planning to sell its student loan business and $32 billion in related assets. Citigroup currently has $1.94 trillion in assets and $413 billion in long-term debt. Additionally, the company also has $1.78 trillion in other liabilities. Citigroup has large amounts of assets that are not easily converted into liquidity. This means it is harder for Citigroup to transfer its assets into cash if the company needs to pay off its short-term debt. In addition to Citigroup high debt in the fourth quarter of December 31, 2009, the company’s net income to common was a negative $7.58 billion. In August 2008, Citigroup agreed to buy-back $ 7 billion of bad debt.

Citigroup's troubles started when the housing crisis loomed; conversely, the majority of the loans went into default. People were not even paying on their principles. The company’s plan is to sell some of its assets to pay down its long-term debt. So society asks, "Why is Citigroup selling its student loan business?" To answer the question, the government also announced that it will no longer protect private student loans. These loans were for students who wanted to get additional loans while they were in school to cover additional expenses. Neither subsidized nor unsubsidized loans were affected. However with a broken economy, who knows what the future will bring. 

http://online.wsj.com/article/SB10001424052748703904304575497812285217790.html

Microsoft Raise Dividends, Authorizes More Debt

In business in order to increase growth within a company, having debt is a necessity. On September 22, 2010, Microsoft raised its quarterly dividends by 23 percent to 16 cents per share, which is the first increased in two years. Microsoft is one of the cash-richest companies in the world. The company has approximately $37 billion cash and cash equivalent on the balance sheet. There has been speculation that Microsoft is being pressured to spend more cash.

Microsoft, the world largest software company, is always driving the latest and greatest technology. The company has a budget of $7 billion in research and development. Microsoft also has had intense cash flow within the last four quarters; the company’s net income cash flow increased by $15 billion. Microsoft is a company that always seems to produce. Just like every other American, I cannot wait for Microsoft's next great innovation.

http://news.yahoo.com/s/nm/20100922/bs_nm/us_microsoft_dividend

Do Bill Gates and Warren Buffet Know Something We Do Not?

During the past few years, Bill Gates and Warren Buffet have been buying massive amount of stock in the same company. It is speculated that this company could make Gates and Buffet a quick return with high profits. The Security Exchange Commission (SEC) discovered this behavior by examining Berkshire Hathaway's SEC form 13F-HR/A.  According to SEC research, both Gates and Buffet in 2008 and 2009 bought on average abundance shares of stock 62 times. Gates and Buffett, two of the world richest man, invested approximately 1.9 billion shares in this company.

ALJ — Analysis

After performing intense research, it is concluded that Gates and Buffet have made a smart investment. The company that Gates and Buffet wisely invested in is under secrecy. In fact, I could prognosticate that the company is more risky to invest than other companies because it is speculated to have quick returns with high profits. If I were going to invest any of my money in a company, and I had to hand pick two people to follow; Bill Gates and Warren Buffet would be my top two choices!

http://web.streetauthority.com/land/buffett/buffett-gates-1-9-faq-out.asp?TP=477&ref=ws247
http://www.nydailynews.com/money/2010/06/16/2010-06-16_bill_gates_and_warren_buffett_ask_oprah_bloomberg_other_billionaires_to_give_big.html

Who Can The Investors Trust?




What DO Your Investmens Look Like?

On September 18, 2010, the Security Exchange Commission (SEC) is one step closer in revealing those companies that dump their debt at the end of each and every quarter.  Some companies would dump their debt to increase profits, so they could look better in the eyes of their investors, which gives false representation. As a result, the SEC unanimously voted to implement a practice called window dressing. This will help investors to spot firms who slash their debt before quarterly earnings.

As an investor, I do plenty of research before I decide to invest in a company. There is no set statement that investors analyze to determine whether they should invest or not. Of course, annually or quarterly statements can give investors a prognostication on what direction a company is heading. Or does it? In history, Americans have learned that anything can be manipulated. For instance in late 2001, the infamous Enron scandal came to an end. Enron was known from deregulating electricity to monitoring and selling broadband waves in the air. The reality was that Enron was a house of cards! The company manipulated annually and quarterly earnings, lied to investors and analysts, as well as committed one of the biggest deceptions in American history. This was fraud on massive level. Enron had help from a highly reputable accounting firm, Arthur Anderson, well-known lawyers, and trustworthy banks.

In the near future, I  do not know if implementing the window dressing is going to help stop businesses from committing fraud or give investors a better insight whether to invest or not. I support the SEC for cracking down on rules and regulations. If investors are going to invest, they should have a true representation of the company.

http://online.wsj.com/article/SB20001424052748703904304575497661581547790.html

http://www.enron.com/

How Do You Determine Value?

 

What is the value of this car?

I came across this interesting topic while shuffling through some notes from my Business 501 class. In theory, everyone has his or her own definition of value. In mathematics, there is an absolute value. However, in life, is there a real definition for value?

When you shop for a product at Radio Shack, Target, or Wal-Mart, what do you consider a great value? Is it price, brand name, and/or accessibility? People’s values tend to alternate over time. I remembered in 2001 when the World Trade Center was hit, and the economy was sliding down the tubes. Gas prices were at its all time high and people traded their SUV's for four cylinder cars. It was a crisis! People’s values tend to change as their spending habit decreased. The products that customers normally considered cost effective and high quality were substituted. In today’s society, consumers are utilizing the tools they need in order to be more price conscious­, for instance, comparing prices on the Internet. Even when consumers purchase products over the Internet, it takes time to receive the merchandise. Consequently, what is more important to consumers — value or convenience.

However, value is not always getting good prices and saving money. For example, have you ever seen something on eBay that you would never find in stores? Alternatively, went to a store solely because you knew that a certain product was sold their exclusively; these are examples on how value is created.  

People every day subconsciously think about the value factor whether they know it or not. The next time you go to lunch and purchase a Big Mac meal or Subway sandwich, ask yourself if that product is worth the six dollars. If yes, that product has a value. If no, you will substitute, or go home hungry. Value to me is more willingness versus needs.  How much you are willing to pay or sacrifice in order to receive what you desire. What does value mean to you?



10 Mistakes That Start-up Entrepreneurs Make!

A.L.J said, "There are no excuses of not knowing, if the research is out there to gain the knowledge." In keeping with this quote, I read an article in the Wall Street Journal about the ten mistakes that start-up entrepreneurs make. This article explains in detail what strategies anyone should do if he/she wants to be a successful entrepreneur.

Out of the ten mistakes, there were two of them that intrigued me the most. For instance: Did you know that you can have too much start-up capital, or you can ask too many people for advice? According to Rosalind Resnick, the writer of this article, businesses that have too much start-up capital tend to linger away from their mission. Companies have an inclination to hire more employees than expected and waste valuable resources. The article suggests that companies save their leftover capital for a rainy day.

Can you ever do too much research? According to this article, you can! When you start-up a business, you should do intense research. But do not search too long! People who get advice from too many people tend to procrastinate. I strongly recommend business professionals to read this article; it is definitely informative and an eye opener.

.http://online.wsj.com/article/SB10001424052748703467004575463460389523660.html?mod=WSJ_hp_mostpop_read

Will the New Health Insurance Plan Help or Hurt the American people?

Will there be a shortage of medical doctors within the next fifteen years? Like every other American, I weighted the pros and cons about this new health care bill. Recently, President Barack Obama signed a bill that stated it is mandatory that every American has health care insurance. As an American, I supported that bill. I believe that every American should have the right to get an education. So why should health care be any different?

I believe that people who major in the medical field should get free education! President Obama gave billions of dollars to teachers, to help other countries, and to simulate the economy. Why not invest in universities to entice students to enter the medical field? As a business student, I can respect student's decision on not entering into the medical field. The majority of the medical doctors have unbelievable debt once they finish their residency. There is also speculation that medical doctors and nurses will have a salary cap, which means that the government will decide their salaries. I guess like every other American, I have to wait and see if this bill will help or hurt the American people!

http://online.wsj.com/article/SB10001424052702304506904575180331528424238.html?mod=WSJ_newsreel_careers