The greatly renowned investor Warren Buffet recently commented on the current developments in the Euro Crisis, with Portugal’s fiscal problems at the forefront.  There he says that he might not be surprised if the shaken currency of the Euro-zone might seize to exist.  However, where many people would despair in a situation like this, Warren sees an opportunity to invest in Europe, as prices there fall sharply.  Just recently Berkshire Hathaway bought the retailing giant Tesco.

The investments in Europe are not however the only thing that Buffet has been up to, as just this week he went to the earthquake stricken Japan, near the Fukushima power plant and bought a 71,5% share in Tungaloy, a company that makes manufacturing tools for car production.  These investments show that Warren Buffet is not afraid of investing in a market, which has been shaken by natural disasters or a fiscal crisis, and gives an example of how to behave in the market.  Meaning that if you have money to spare, do not just sit on it while the economy slowly crumbles, use your money to invest and keep the market going and strong so it is able to overcome the crisis that it may find itself in.

The Occupy Wall Street movement has been at large for several months now, but has recently become more violent as police forces in occupied cities move in on protesters, like recently shown in University of California at Davis.  Amidst all of this newfound violence, one might ask himself what is this all for?  Is there a common cause that all protesters rally behind, which makes all of this justifiable?  Nathan’s earlier blog post on the matter and the movements webpage both suggests that it is the political injustice and improper distribution of wealth in America that is the main issue of the movement.

However, recently I have stumbled upon videos and photos of people who have ridiculous demands, and are protesting only for the sake of protesting.  The video posted with this post shows one of these people demanding the “top 1%” to pay his collage tuition, which could not be further away from the proposed goals of the movement.  Now seeing this makes you wonder what is really being fought for in the streets of New York and so many other cities around North America.

Occupy Wall Street Protester Wants College Paid For Because That\’s What He Wants

Coca Cola Ltd announced recently that it was going to change iconic design of its cans, in order to show support for the cause of fighting polar bear extinction.  It has pledged to donate $2 million dollars to research programs designated to prevent polar bear extinction and then further million dollars to match public donations.  Like Selina Wang says in her blog post about the matter, it is a step towards social responsibility taken by Coca Cola.

However, what are Coca Cola’s true motives behind this?  It is fantastic that a multi-billion dollar company takes interests in such a noble cause, but personally I would look at this as a major promotion campaign.  Just the promise of saving polar bears appeals to consumers in an ever-increasing eco aware world, giving Coca Cola a distinct point of difference amongst rivals such as Pepsi.  Just to support the claim of this, is to look at Coca Cola’s finances, they made $12.689 billion in profit last year, and have an advertising budget of $2.44 billion a year.  This shows that the $2-3 million dollars promised to the cause is only a dent in the Coca Cola Empire, and will most likely be covered by the increased sales from the new cans.

Coca-Cola Canada 2011 Arctic Home commercial

Considering the four factors that define a entrepreneurship, Youtube can be considered as a very entrepreneurial venture.  It was a big risk taken on by the founders as they had $11.5 million investment start up fund from Sequoia Capital, which is a major risk as it was not guarentied any returns.  The idea behind Youtube is also very innovative as there was nothing close to what Youtube is now at the time, a site where anybody with internet access could post a video and voice their opinion, do something stupid or just share videos with friends and family in such an easy way.

There was also immense wealth created by this, as only a year later the company was sold to Google for $1.65 billion, which is a almost 14,000% growth for the start up of $11.5 million.  So the wealth was generated really fast, in one year, and the size of the wealth creation was huge.  Therefore in my opinion Youtube can be considered one of the best example of entrepreneurship in recent years.

Sources used:

Youtube About (in icelandic, because of my settings but at least you know where it is from)

Wikipedia

Iceland: A land a few years ago struck with one of the most devastating economic crisis faced by the country so far, indebt to countries overseas after an over-inflation of its banking system.  With a population just over 300,000 people and a very small industry it is hard to see how it is supposed to totally renew its car fleet into an electric one.  Referring back to Marcus Laube’s blog post on the electric car fleet of Iceland, I have a completely different perspective on this matter.  Yes, Iceland is immensely rich in its Geothermal and Hydroelectric energy, but that does not mean that it should have only electric cars.

For a country to do that it would require a huge investment, either from the government, or individual households to totally replace their cars with expensive electric ones just so they can enjoy the benefit of the cheep electricity.  In the current state that the Icelandic economy is in now, there are no such funds to go around, and even though it would drastically reduce the amount of petrol imported to the country, it would only mean that the price of electricity would go up, as increased demand will shit the price up-wards leaving the Icelandic households in worse shape than before.

Thus I think that even though it is a good idea to work towards in the future to have a greener car fleet, it is not the time right now to be thinking about this as the most important thing now for Iceland is to get out of its economic slump.

The markets have been rather favorable recently, as the average price of most of the indexes, or Portfolios, have gone up in recent days.  But what has been causing this? Was it George Papandreou’s decision to drop the Greek referendum on Thursday, or the announcement of the G20 to increase the funds that the International Monetary Fund has to spare?  It can be hard to pin point what it was that made the price go up, but something must have strengthened the confidence of investors in recent days for this development to have happened.

However, recently there have been coming troubling news from Greece’s largest neighbor, Italy.  There borrowing rates have hit new highs and people fear that Eurozone’s third biggest economy might be on the verge of collapsing any time soon.  The news brings the Eurozone’s back to being terrible, as the Greek problem had taken a seemingly favorable turn.   This will most likely have a negative effect on the markets as investors become discouraged about the future of the Euro and its countries.

Euro Crisis Explained

Sources Used

G20

Italy

Greece

The article from the Forbes webpage explains the deep and unsettling problem that is facing the world economy.  Europe, which is on the brink of collapse, as its leaders desperately try to keep together the currency union that was deemed from the start to have difficulties, wants China to swell the EFSF.  However, China might be unwilling to do so as it would basically be throwing money out the window, as the bailout fund is only a temporary solution to the problem.  But seeing how China is so dependent on European exports and currency investments, it is hard to see how Hu Jintao and the communist party can avoid getting involved.

What most likely needs to be done is just stop trying to postpone the inevitable crash of some economies in order for the system as a whole to recuperate from the imbalance that is the world economy.  It is going to be rough and unpleasant but inevitable anyway so by spending these mass amounts of money is not helping anybody in the long run.

On September 18^th Netflix announced that it would be splitting its services in two, into Netflix with the online streaming services and Quickster with the DVD by mail service.  As suspected by Netflix this infuriated some customers, many of who were already angry by the 60% price increase introduced this summer.  However, Netflix has now announced that it will not be slitting thus cancelling all plans with Quickster.

Now my question would be why would Netflix even try to do this in the first place?  People obviously value the fact that they can get both services at the same place.  So the obvious answer is that Netflix feels like it would be profitable to do so, as both services have different cost structures so the decision from that standpoint would make sense, even though it would cost them a few customers.  However, it seemed to backfire with a lot more people than they expected dropping their account, but the correct number of which has not been released until October 24^th.

So now as Netflix makes a U-turn it can be predicted that it will greatly influence the price in their stocks, as these types of actions do not help the confidence of the investors.

Article from NY Times: http://mediadecoder.blogs.nytimes.com/2011/10/10/netflix-abandons-plan-to-rent-dvds-on-qwikster/?ref=business

Article from Business Week: http://www.businessweek.com/news/2011-10-10/netflix-retreats-from-plan-to-split-dvds-from-web-streaming.html

As China keeps its position as the world leader in economic growth while the US, Europe and Japan continue their downward spiral, China might run into some future problems.  The current system favors the giant state run banks and the firms that drive its growth, which in turn are driven by the savings of the middle class.  However, there might be a problem arising, as in order to continue with their astronomical growth, China needs to form a consumer class that buys more products from the world market.  Figures in fact show however that consumer spending is down to 35% from 45% of the G.D.P in a year, as consumers cannot keep up with the rising prices as their savings have such low interests rates that they cannot keep up with inflation.

The communist party introduced in their latest five-year plan that they planned to increase consumer spending.  However, that can be a double-edged sword as the banks highly depend on the savings of the households.  In addition to the banks, the central bank of China is also dependent on these savings, as it needs the funds in order to make its investments in foreign exchange markets.

The link from the NY Times:

The article I posted here is on the unethical role that Goldman Sachs played during the years leading up to the Wall Street crash of 2008, where they bundled together thousands upon thousands of sub prime mortgages and sold them of to pension funds and foreign financial institutions, with the knowledge that this product they were selling was seen as a “toxic waste”.  In addition to this, they bought insurance from AIG, which was to compensate Goldman Sachs if the whole thing toppled.

So my question would be, was it ethical of the top brass of Goldman Sachs to do this in order to clear its company from the danger and the potential bankruptcy that they knew could be at hand if they were stuck with their product, by selling the bundles and then betting against their own product?

Not only are people speculating the legality of this action, but thinking of the consequences of this, which was the bail out of AIG, which resulted in $12 billion of tax payers dollars being used to compensate Goldman Sachs. This action as a whole can be seen as a good example of how ethics are trampled when there is big money involved and your own “ass” is on the line.

Here is the main link: http://www.mcclatchydc.com/2009/11/01/77791/how-goldman-secretly-bet-on-the.html

And some further reading on the matter can be found: http://www.huffingtonpost.com/2011/01/26/goldman-sachs-aig-backdoor-bailout_n_814589.html