Big brother is back to take control.

For this blog I would like to focus on bankers and their bonuses. I choose this topic as it seems rather vital to me, not just due to the recession but also due to peoples and the government’s reaction to it.

For this I have red several articles and was amazed to find how all of them were pro the possible new law coming out restricting the bankers bonuses in the United Kingdom and giving more power to the “people” and the government.



The law which was also discussed by the Queen and Gordon Brown should be passed through parliament at the next general elections, by June next year. The law would only be applicable to future contract which would make excessive bonus contracts void under the law. It would furthermore empower the FSA in controlling bonuses and calling contracts that encourage bankers to take risk by making their bonuses dependant on a certain return on investment. It would also reduce bonuses and no longer allow for millions to be spent on “pinstriped robbers”, who are reckless and failures that the public had to bail out. This in turn would allow for more security and accountability in the financial sector. Forgein banks operating within the United Kingdom shall also have to abide to this law, however other subsidiaries, even those of British banks will no not have to follow this law. Is that really fair? And how does this encourage someone to work in London and not for the same bank just in a different location?





The story has been regurgitated so often they i do not feel the need to go into the exact details of the new law but shall focus more on the styles and approaches the newspaper articles took for this story. The BBC story was the most straight forward and detailed article, however, it as well as the others had a clear pro this law and anti bankers attitude, stating that bankers should be “struck off the same way that doctors are struck off in the case of misconduct. The article also had a proud air to it, stating that the United Kingdom was the first to do this and this it was setting example by taking actions while other countries only talk about it. The articles uses a lot of quotes in their favour, against the bankers, although they do briefly mention that the bankers association believes that it might cause London to lose its power financial status and lose out on recruiting future talent. The author of the article seems to be thinking he is talking from a public perspective who has enough of the power that banks have, it also seems as though he has a personal grudge against banks, as he ends the article with how this law would give people the power to over banks and their high charges. The article also mentions that this law would hinder banks from encouraging customers to borrow more money than they can afford, neither may banks send out unrequested credit card checks. I believe that such restrictions, would cause banks to lose a lot of money, banks are pillars of our society that is why the government had to save them in the first place, so is it wise to weaken them? Having more transparent yes that is needed, put pulling the carpet away from underneath their feet might not be the right thing to do.


From reading the Times i thought that it was interesting that the parliament used the Queen and her influence over people to address the topic further. Although the Queen no longer has the power or support that the royal house once enjoyed, she still has some influence. This article had more and better details then the others with some good pro contra arguments. As this is a very debatable subject , if it back fires it could become a big problem, however looking at other students from this university or others, many of them still wish to be working in the financial sector, so maybe this will not have as big an effect as claimed. Or maybe it does and people will not want to work in England anymore but in other countries where these laws do not apply. The article creates some bad blood among the readers saying that bankers personally do not believe that this law shall hold up and that they shall always be loop wholes. Yet at the same time they state that the “trust between the people and financiers” is to be re-established. The article is trying to calm down the hatred that Bankers have received since the crises, a good example of this is the G20 summit held in London, where bankers were asked to work from home or to come into work with casual wear in order to hinder violence.
This articles also has a rather Interesting title, showing the power struggle that the government is experiencing with the banks. “Labour tries to tame...” taming, one tames a wild animal, have banks gone wild, have we not created more transparency, can they really blame all of it on the banks, they were allowed to roam free during the good years, so they are not the only ones to blame but the game keeper to.

The Daily mail article was quite harsh on the bankers, calling them “pinstriped robbers”, portraying them as mobsters nearly, who need a “watchdog” over their shoulders, protecting the civilians from the criminals. The new law shall give the FSA the power to tear up bankers, not their contracts but the bankers, again seems like they are criminals where the government has to tear apart their lives to get to them. The article tries to create a lot of bad blood by quoting a lawyer who says that bankers shall never be touched, as the government does not have the calibre or muscle to take them down should bankers go to court. Saying that this new law is not enough, it is only a “blunt instrument”, and that it shall not stop bankers from “ripping off” the public and creating a win/win situation for themselves on every account. The article really calls upon readers to be outraged and angry at the big bad robbers and criminals we call bankers.



The telegraph took a different approach to the situation, they were not as harsh but still absolutely in favour of the government. Making the new law into a making it into a pretty little package, it seems to harmless what the state is doing. Saying that banks are rip offs for the public and this law will give the public more power. Stating that banks shall have to pay back and own up to thousands of customers. Although not as in your face style as the Daily mail, the telegraph is still hipping it up in order to obtain support. As this new law will cut individuals’ legal costs and give them added muscle against banks that levy unfair charges. Stating that this is a necessary measure as bankers believe themselves to be superior but that they are actually only “fellow citizens” that had to be bailed out of their failure.
The telegraph also awarded one article stating what bankers believe this new law should bring to the United Kingdom, however they still argue in favor of the law saying that it does not matter if talent is discouraged from coming to London, as it shall only discourage those who seek to take advantage and we do not want these in our country anyway.


Whatever the newspapers are saying i have to ask myself; is it really wise to give the government so much control, especially over the financial sector? In the long run this shall be in the public’s disadvantage, the state being able to access all your records etc.. Are we not already controlled enough? big brother seems to want to get into every part of our lives.



The sun articles was very weak , but again for the public and stating how this law will give them power and not stating it as it is, that it shall give the government power not the little man. They also had a clear disliking of bankers calling them “fat cats” and that the bonus system is “ludicrous”.
The comments on the paper from the readers were rather harsh, calling labour a failure and that no one believes that they can hold their weight for anything that they are just “suckers” and do not believe that this plan shall be good for business but that it is “alien to business success”.

S

Sources used:

BBC news
'Reckless' bankers face bonus cut
15.11.09
http://news.bbc.co.uk/1/hi/uk_politics/8361372.stm

Times Online
Labour tries to tame banks with plan to outlaw controversial bonuses
16.11.09
http://www.timesonline.co.uk/tol/news/politics/article6917982.ece

Daily mail
http://www.dailymail.co.uk/news/article-1229361/Reckless-bankers-contracts-torn-tough-new-laws-crack-bonuses.html
20.11.09
Reckless bankers will have contracts torn up in tough new laws to crack down bonuses.

Telegraph
Bankers warn laws on pay and bonuses will scare off talent
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6576390/Bankers-warn-laws-on-pay-and-bonuses-will-scare-off-talent.html
15.11.09

The Sun
Block on bankers in bonus scandals
16.11.09
http://www.thesun.co.uk/sol/homepage/news/money/2731331/New-laws-mean-big-bonus-bankers-will-have-contracts-torn-up.html

Telegraph
Now State takes over bankers’ contracts
14.11.09
http://www.telegraph.co.uk/finance/6570841/Now-State-takes-over-bankers-contracts.html

Survival of the fittest, or is it those whose who merge who survive?

There are no doubts many positive aspects about a merger, economies of scale, synergies etc... But there are also certain pitfalls. Is it wise to merge to hurting giants together, or shall they drawn themselves in sorrow?

Mr O’Leary from Ryanair welcomes the merger of British Airways and Iberia, saying it shall leave more passengers for Ryanair, as the merger of the two is “like two drunks supporting each other on the way home from the pub”. Clearly there is a least one person in favour hoping to pick up the pieces (passengers) when this who affair fails. Some are not so content on the matter Richard Branson for example names it a “monster monopoly”, that should not be allowed. The Virgin team are afraid that merger shall be successful and that they shall dominate the market forcing other airlines out.


The feeling of the people seems to be mixed, passengers are afraid that the quality they are used to from British Airways and their award winning cabin space and service shall no longer be at their disposition, as Iberia simply cannot match the high standard. The Spanish do not seem to enthusiastic either, as one person compares British Airways with Titanic only with more holes in their pension plan.
Oh yes that pension plan is a big problem, with a deficit of £3 billion, if the merger is to be successful, Mr Walsh has to address the fund problem and has to come to an agreement with all 12 trustees. Although the prognoses seems to be rather sunny skies, as the trustees seem to want the merger to happen, as it could secure British Airways future. Mr Walsh assures the pension fund shall not stand in their way and that within the next two to three months the trustees and British Airways shall have attained an agreement.


Well let’s look at what this merger entitles, what it means for both parties, and their passengers. The two airless shall merger in a similar style and structure as KLM and Air France did in 2002; the structure was seen to be very complicated, yet successful. Can this be the case for this merger as well, it seems less likely, 2002 was still a booming year, where everything and anything was possible, and can this still be said nowadays? Anyway the airlines companies shall remain two separate brands (allowing them to continue to show the flag and follow through with their special contracts with certain countries or airports), under one umbrella holding company named TopCo. TopCo interesting choice of words, are they really the top, I think not. Personally I am not a big British Airways or Iberia fan, they are constantly late, lose one’s baggage, rude, bad food and service, shall I go on? TopCo you wish! TopCo shall have its operation centre in Madrid with Iberia’s CEO, taking the high seat and Mr Walsh shall take care of the Headquarters situated in good old London. British Airways shall hold 55% and 45 shall go to Iberia. Apparently the first talks were more like 60/40 but Iberia was able to pressure Walsh with the pension fund deficit.


The merger is to be executed in the first quarter of 2010. So what shall that mean for the airlines and their passengers? First and for mostly it shall help cut costs, Mr. Walsh is setting a goal of £400 million within the next five years, this should be done through cost cutting such as reducing staff cost, but also through removing duplicating functions such as head offices maintenance and sales force. The unions do not seem to be too happy with that, the Spanish union immediately demanded a 4% salary increase, already adding to their extremely high pay grade comparing to other airlines. The BA union threaten that they would commence strikes as of the end of November. Although they are willing for the merger to go through they expect and demand that no more people shall be made redundant, they have already suffered enough this year. However, Mr. Walsh announced that; as of Monday 3000 cabin crew staff shall be working on a part time schedule only, two year pay freeze, reduced holidays and 1000 will take voluntary redundancy. I am sorry but does that even exist, ok maybe one person says that they feel they shall be better off somewhere else but one thousand I doubt it. I just hope none of you are planning to take British Airways to go home for Christmas, if you do I suggest you take a blanket to the airport, as if strikes commence you shall never know if you shall actually be flying.


However do not despair there are positive sides to this merger as well. It shall present the airlines with the opportunity to drive down costs and boost revenues. It shall allow them to challenge other major players such as Star Alliance and the KLM, Air France, which in this recession period could become the only possibility of surviving. So what would be worse not having a national airline or simply having less cabin space as you are flying with Iberia?


Through this merger the airlines shall be carrying 62 million passengers a year and employ 60,000. It shall enhance the network of both companies, giving it greater flexibility and access to over a 100 destinations. However this might only be the beginning as apparently talks are underway to incorporate American Airlines into the merger, as through this the TopCo Company shall be the major player in the Atlantic. Whatever happens within the continent the airlines especially Iberia are not able to compete with other transportation methods such as the trains. So will the Atlantic be enough for 3 global players?


Personally, I believe that the industry has been hit so badly by this recession, that their survival might well depend on the merger. It might be a bad time, especially since both companies together shall write a £600 million loss this year alone. It is wise for two companies whole clearly have cracks on their foundation. Well what else is there to do? How can they ensure their survival otherwise? Most other companies are merging or have already merged; therefore it might be a most.


Regarding the reading for this week, well I thought it would be interesting to follow the story over the week to see how, why, from which angle and how often the newspapers would cover the story. I think Times online was the winner on that last point, they brought out 9 stories over a 2 day period, seeming to be very anxious of what the outcome shall be and what effects it shall have. Each looking at the merger from a different perspective, although what they had to say about BA was not all peaches and roses; they definitely were on the more nationalistic side. It was also interesting to see what peoples comments were, it generally was not the best, calling it a messy affair. The language varied from being more tabloid style quoting O’Leary and his somewhat nasty comments, to being more news worthy, it had a questioning style to it throughout the different articles, making it all a little more interesting. However, in general it gave a good overview, with the pros and cons for both sides. I would say it tended to be more pro BA, but let us not forget that this is their flag flying airline, how can they not be in favour of them. The Daily Mail was very funny read, as apparently the deal is already through, they are very positive about it and are as they say in constant contact with Mr Walsh himself. Way to go fellas! The Swiss article was straight forward and as objective as can be, stating the details of the merger, the why, how and when, it was a goof informative read, but I could not detect any bias. Reuters and Bloomberg focused on the financial aspect and did not care much for the passengers and their lack of cabin space. It covers the increase in the share prices since the announcement of the merger and that BA share are raising faster than Iberia’s. They talk about the unions and the likelihood of strikes. Bloomberg also incorporates opinions of different analyst and other airlines such as Virgin.


The Telegraph was rather pro merger and was quoting Mr Walsh every word it seemed and nobody else’s, however they also covered the pension plan deficit, yet were happy to say that the affair could be regarded delta with.


The titles also said a lot about what the articles thought of the merger this week, the Times focused on Iberia and the negative sides they would bring “more routes but less class”, or that BA shall “still be able to fly the flag”. The Swiss newspaper named it the struggle for the skies, also stating that this move might be more of a must then a want. Reuters and Bloomberg’s heading focus on the financial side, that the merger might not be enough or that the pension fund is a bigger issue than many other newspapers claim. The Daily mail as said before was rather positive about the merger happening soon, “British merger with Iberia imminent”. The wording is also rather interesting, as it is a whole country and its people (British) merging with just an airline (Iberia).


Whatever the newspapers say the merger is not over yet, there shall still be some interesting stories to come. I wish them luck and hopefully for me the soon to be new additional power of the skies shall help push airfares down from other companies, as wouldn’t that be splendid!


Till next week,



S



Sources used:
Times online
http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6915425.ece
Ryanair's O'Leary welcomes BA-Iberia merger
13.11.2009

Times online
http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6916739.ece
More routes but less class
The merger of British Airways and Iberia is not one of equals when it comes to product quality
14.11.2009

Times online
http://business.timesonline.co.uk/tol/business/article6916561.ece
Merged group will still be able to fly the flag
14.11.09

Times online
http://business.timesonline.co.uk/tol/business/columnists/article6915006.ece
BA taking a bit of a flyer with Iberia deal
13.11.09

Times online
http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6916756.ece
Destination for Europe’s biggest airline
14.11.09

Times online
For Spaniards merger is seen as a bad move
http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6915018.ece
13.11.09

Times online
http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6916635.ece
Iberia’s costly crew will be the focus of attention for Willie Walsh
14.11.09

NZZ
Drei Grosse kämpfen um die Lufthoheit
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/drei_grosse_kaempfen_um_die_lufthoheit_1.4011789.html
13.11.2009

Reuters
BA, Iberia merger hinges on pension deficit
http://uk.reuters.com/article/idUKTRE5AC0XD20091113
13.11.09

Telegraph
http://www.telegraph.co.uk/finance/newsbysector/transport/6557766/BA-Iberia-4.4bn-merger-creates-Europes-third-largest-airline.html?utm_source=telegraph&utm_medium=TD_baiberia&utm_campaign=Finance1311
BA-Iberia £4.4bn merger creates Europe's third-largest airline
13.11.09

Bloomberg
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKD1nSQQefAs
British Airways May Need AMR Alliance More Than Iberia Merger
13.11.09

Daily mail
British merger with Iberia imminent
http://www.dailymail.co.uk/money/article-1227347/British-Airways-merger-Iberia-imminent.html
13.11.09

Welcome back Gordon Gekko !

The hedge fund scandal continues, as newly arrested are already pleading guilty.






I chose this topic, as it represents the world we are living in, not only because these men were able do actively pursue insider trading, but that we are living in a world full of witch hunts. The government is trying every possibility to get their hands on money, to blame others for their failures. First it was the large bonuses, then the Swiss banks and the apparent tax evasions, now its hedge funds, what next?



Let’s be honest who doesn’t want Bud Fox, Gordon Gekko's assistant to get away with insider trading in the epic movie “Wall street”? Deep within us, we all want to succeed one way or another, we want to be on top and stay there. There will come a time when we decide what path to take and I do not condemn those who take the wrong path, one can so easily be lured into it.
Maybe this is just my Swiss heritage talking; I believe my entire University year knows how absurd I find the allegations about the tax evasion and abolishing tax havens, as I had rather heated arguments about it with my International Business Teacher. Where there is a tax hell as in Germany people will seek havens, its how we are designed.

But let’s look at it realistically, insider trading is morally wrong! There is a platform of integrity, devotion and professionalism, these are the founding pillars of every job, every company and every industry. That should be no different for a hedge funds, where a fair and competitive environment is quite simply a must. However, the fact of life is that someone shall always have an advantage over another person or company in one way or another. Hedge funds reward on returns over professionalism, so how easy must it be to stray from the path?

Looking at the headlines this week, one could not miss the Galleon scandal, another fourteen have been accused, bringing the list to 20, making this the biggest Hedge fund scandal of all times. Of the accused five have already pledge guilty, in the hopes of obtaining some sort of deal. Although this scandal only involves $40 million, it has far reaching effects, as this is the beginning of a more controlling and action taking era on behalf of the government, compared to before when hedge funds were kept on a rather lose leach. This was the case a, it is a very difficult process to follow on a daily basis, a company like Galleon used to do more then a 1000 stock trading’s a day, how does one analyse such data, how does one know which of those are insiders? Authorities claim that more of these cases are to come e.g. S.A.C. Capital Management and are asking anyone who has been involved in insider trading to come forward voluntarily. This insider trading arrests were handled in a rather uncommon way, phone tabs were used, wiring etc… these people are now treated like criminals, like mobsters… The scandal does not stop at Galleon and its employees but further involves high rolling firms such as McKinsey, IBM, Google, Hilton hotels and also lawyers as well as investors, amongst many others.

The funder of Galleon, Mr. Rajaratnam from Sri Lanka, denies any allegations and was released for a bail of $100 million, could there be a more outraging sum? However, the court was afraid that he might skip out on them and leave the country. Yet it has been proven through phone call conversations, although they were very prudent using pre paid phones, that he was actively involved, there is also an ex employee who has become the main witness against Mr. Rajaratnam, who shall allegedly prove his guilt. However, to date those who have pleaded guilty do not in anyway inflict Mr. Rajaratnam, they do not say that they traded on behalf of the Galleon company, but merely for themselves.

I believe that this has become such a sore subject as people feel betrayed, they are losing everything, unemployment has reached the 10% the highest rate since 1980, so way should somebody ride on the wave in an unjust manner if they can not? It is more an outcry for some sort of justice from the population and an outcry for a scapegoat for the government, trying to hide all the other things that are going so wrong.

Looking at the different sources, this was an interesting read; this week I focused more on how the newspapers approached the topic. The Swiss newspaper NZZ, as always gave the facts and was very neutral, stating who was arrested why and what shall happen, rather briefly. This was written for someone who is already acquainted with the topic. They also give a brief quote of the FBI, but they are truly trying to stay objective. The New York Times is written like a gossip paper giving loads of overdosing information, things that are completely unnecessary. It is extremely details, giving information about every single arrested person and also writing a whole article on Mr. Rajaratnam himself. They are trying to bring the news to the people. They also have many quotes from the FBI, and from the attorney working the case. It nearly seems as though they act on behalf of the government, trying to smoke out other insider traders. To be honest if one is really interested about the topic this shall give you the most detailed information, although I thought one could erase three quarters of it.

The Daily Mail was an interesting read, as they had two articles on the subject, one with the usual slandering, outrages attitude and the other rather straight forward, no harsh words, just facts. However, the articles seem rather badly research or they are trying to push outragesness to another level, as the $4 billion that the hedge fund managed, suddenly turned into $7 billion, that’s quite a difference. In the second one the language is also what one expects from this newspaper, “savvy managers”…. Their perspective is rather juicy, whole phone call conversations are listed. Reading it, everyone is as guilty as possibly can be, it leaves no doubts. It really is selling the story, cost it what it may. The Telegraph also used this outrages approach, 20 offenders suddenly become 35, they also go in depth how these people managed to get away with this insider trading for so long. Exactly detailing how and which sim cards where used what code names etc… They are also mocking the government and the system of sorts calling it a merely “casual betrayal”. To me these two papers were a rather amusing read, I like the outrages, the blown out of proportion, I can literally see people sitting at their kitchen table making themselves an absurd opinion based on these article, it actually is rather sad.

I red the Economist just for background information, it was as usual a little dry, but gave all the information I was seeking. The Reuters article was different to its usual style of writing; they were making fun of the whole process, comparing it to the Sopranos TV series. They are rather descriptive but not of broad facts, stating what we can expect, or how this came about or anything of that sort, they are concentrating mostly on the ridicule of the situation and of the people involved. They are also completely in favour of the state; I wonder why the articles this week are not as objective as usual? I also red a German newspaper N-tv ,just to really get a good idea of how different media is covering this topic in different region, countries and continents. The first three paragraphs are word for word the same as the Swiss newspaper, I wonder who copied who? However, after that it takes a different focus on the topic as the others, focusing more on the fact that Mr. Rajaratnam was set free and what does that imply. They also define and state why this is wrong why one should not commit insider trading, are they having such problems themselves? Or do they feel that the German nation shall not have an as harsh opinion on the subject as many other countries? Who knows!

There shall always be a Gordon Gecco, in all industries, the sooner we accept this, the sooner we can look at the world as it really is, full of flaws, as we are flaws and yet it remains a miracle in itself.

Till next week,

S





Sources used:

NZZ
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/insider_usa_hedge_funds_1.3977157.html
An der Wallstreet fliegen immer mehr Insider auf
05.11.2009


New York Times
http://www.nytimes.com/2009/11/06/business/06insider.html?_r=1&scp=2&sq=insider%20trading&st=cse
14 Charged With Insider Trading in Galleon Case
05.11.2009

New York Times
http://www.nytimes.com/2009/11/02/business/02insider.html?scp=3&sq=GALLEON&st=cse
01.11.2009
For Galleon Executive, Swagger in the Spotlight
NOT EVERYTHING AS IT SEEMS


Daily Mail
http://www.dailymail.co.uk/money/article-1225603/Galleon-probe-leads-arrests.html
Galleon probe leads to nine more arrests within insider trading network6.11.2009


Daily Mail
http://www.dailymail.co.uk/news/worldnews/article-1221034/Six-face-insider-trading-charges-Billionaire-hedge-fund-manager-arrested-20million-scam.html
Billionaire hedge fund manager arrested over $20million insider trading scam19.10.2009


The Economist
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14710676
All at sea
22.10.2009

Telegraph
http://www.telegraph.co.uk/finance/markets/6510167/Further-arrests-in-US-insider-trading-inquiry.html
Further arrests in US insider trading inquiry
05.11.2009


Reuters
http://www.reuters.com/article/hedgeFundsNews/idUSLNE5A501M20091106?pageNumber=2&virtualBrandChannel=11604&sp=true
U.S. insider trading probe widens
06.11.2009


N-tv
http://www.n-tv.de/wirtschaft/Immer-groessere-Dimensionen-article578602.html
Geständnisse in Hedgefonds-Affäre
05.11.2009

The seemingly never ending nightmare

Unemployment peaked this month to a 10 year high and an end is nowhere in sight.




For so long now, as we have seen in the previous blog’s the newspapers are hailing that the end of the recession has either arrived or is in sight. The newspapers have been concealing many vital facts of where the economy is truly standing by focusing the readers attention on the side story, e.g. when the newspapers wrote about the all time high of gold and not focusing on the weak dollar (as Phillip vividly described in this blog a few weeks ago). However, reading today’s newspaper, although it does not come as a shock, it comes as a crushing blow to a young student hoping to find work after university: unemployment has reached a ten year high in the Euro zone.


October is the 15th consecutive month of rising unemployment in the Euro zone, reaching 9, 7% in the 19 Euro countries and 9, 2% in the 27 Euro nations. Since September of 2008 when the Lehman Brothers bank collapsed marking the official starting point of the recession, 5 million people lost their jobs, meaning a total of 22 million people are unemployed in the EU. The highest figure of unemployment is found in Latvia with 19, 7%, followed closely by Spain with 19, 3%. In Spain there has been an 8.3% increase since the collapse of the construction sector.



(unemployment rate in the EU for September 2009)


Although the figure is substantial, it is less then what economist had predicted, this is due to government measure to combat the crisis. State scheme such as: helping the car makers from having to shut down factories, or short working hours, where employees have shorter working hours but their pay is topped up by the government, this has been extremely popular in Germany and has been implemented in 20 of the 27 EU member countries. The fact that the government is “pouring tens of millions of euros into the economy to prevent a social crisis”, has also helped keep the unemployment rate lower then expected. Is this really the right way? Are these measures not too short term? Yet the European leaders have announced that they would continue to do so and that it would be too early to withdraw their emergency measure aimed at tackling the recession, as this would only help unemployment skyrocket.

However, economist are warning that most of these measures are only short-time working schemes, so what will happen in the future? Can we expect a significant drop anytime soon? Clearly the economy and unemployment walk hand in hand, as in the first three months of 2009, the economy shark by 2.5%, not only due to rise in unemployment, but it certainly is a major component affecting it. Recovery does not seem in sight, economist predict that unemployment shall rise till mid of next year to 11.7%, there shall be no end to it as long as the economy is still in recession.

The EU is looking into a dark whole whereas the American economy is reported to have risen 3.5% this month. How can this be when since 2008 in the Euro zone unemployment has risen by 2.5%, whereas in the US unemployment has risen 5%? However, both the US and the EU are now at nearly 10% unemployment, the US just slashed jobs more aggressively in at the beginning of the recession, whereas in the EU jobs “slowly faded”. Should the EU have been harsher on its people, should we have followed Darwin’s theory “survival of the fittest”? As we can see from the figures the US seem to be recovering, so why are we still so far staring at the empty hole? It must be said before we critic the EU, that from other articles, there seems to be a strong trend to decreasing consumption in the US this month, so maybe even though the economy maybe starting to recover, at least to a certain extent, the people are still sceptical about where the economy shall be going.

This was a rather interesting read, as I believe we are all affected by this in one way or another. I am definitely noticing, from the countless CV’s I have sent only to be told that although my profile would suit their needs, the market simply does not allow for hiring and if it does there are dozens of qualified MBA Harvard or Oxford students applying for the same job. In an economy that is so unstable, where the recession is still clearly an issue, why would a company want to hire an undergraduate student, and invest in that person, when they can have a highly qualified and experienced person instead? As they say “life is a biaatch” and one has to shot for the moon, so as to land upon the stars!

The Financial Times was my favourite article for this blog, as it clearly states the facts of what has been happening, it briefly states how it is affecting the economy in general, although it could go even further in-depth. It is an interesting all round read and gives you all the informational as well as background information that one needs.
Reading the NZZ as always gave me good background knowledge and from other articles I was able to determine that although the US economy seems to be on the rise, not all is in the hunky dory just quite yet. However, again the Swiss newspaper had taken a whole paragraph from Reuters, they seriously seem lazy, or is the Swiss news world so secluded they can not obtain vital world information quickly enough, can they not draw their own conclusions? I feel there is no excuse to copy, paste and translate articles from other newspapers. Apart from that Bloomberg and especially Reuters was quite a heavy read.

Till next week,

S



Sources used:

NZZ
30.10.09
Höchste Arbeitslosigkeit in der Euro-Zone seit 1999 http://www.nzz.ch/nachrichten/wirtschaft/aktuell/eu-arbeitsmarkt_1.3947229.html

NZZ
29.10.09
Amerikas Wirtschaft wächst wieder
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/wirtschaft_in_den_usa_im_dritten_quartal_um_35_prozent_gewachsen_1.3942812.html

NZZ
27.10.09
Gedämpfte Kauflaune in den USA
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/gedaempfte_kauflaune_in_den_usa_1.3933450.html

Reuters
31.10.09
Euro zone jobless at 10-year high, prices drop
http://uk.reuters.com/article/idUKTRE56U25H20090731?sp=true

Financial Times
30.10.09
Eurozone unemployment edges higher
http://www.ft.com/cms/s/0/5c76987e-c543-11de-8193%2000144feab49a.html?nclick_check=1

Bloomberg
30.10.09
Europe Consumer Prices Decline as Jobless Lines Grow (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a13AEgEWZpAY

Bank failures continue, will there ever be an end?

Once again we are faced with a similar dilemma in this week newspapers, the same old question arises, is or isn’t the crisis over?





This Friday we have seen another collapse in the banking system, with another 7 banks having to be closed down in the United States. The figure 7 is not the real issue, it’s the fact that 106 banks have had to be closed down this year, costing the FDIC $ 25 billion. The list of the FDIC seems to keep on rising; at the moment 416 institutes are on the problem list, which is nearly double what it was at the beginning of the year. Evidently we have not been told the whole truth since the start, as I doubt so many banks suddenly had bad assets, what else don’t we know and how dark will the future be? Although there are some signs of recovery and the newspapers play up every spark of it, there are obviously still many issues that need to be taken care of.

The causes for the bank failures are said to be due to the decline in commercial property loans. Small banks were hit especially badly by this, as while larger institutions received government aid, smaller banks were often set aside. However, many of these small banks made risky loans as well during the boom years and are having to suffer and face the consequences now as the recession drags on. Also the rise in job losses is increasing people’s need for loans to cover the dry spell, yet banks are trying to weather the storm of bad loans and are decreasing their leading.

According to analysts of Bloomberg and Reuters, the number of bank closing should and would be higher if the FDIC fund wasn’t depleted, as closing down a bank nearly costs 30% of the failed banks assets. In addition since George W. Bush (typical Bush move) thought it best to shrink the agency’s workforce, they no longer have the necessary resources (human capital) available. However, in order to avoid panic and hysteria, the FDIC sees it as best not to give full details of how deep the hole of its deposit insurance fund actually is.

The FDIC is trying to obtain a greater cash flow in order to shorten the list of the problem instructions. They have proposed that healthy banks pay three years of advance deposit insurance fees, which would help them raise $45 billion and fill up that insurance fund again. Is this the right way, asking for so much in such a time might send even more banks onto the problem list.

On the one side we should just leave nature take its course and have the banks fail, but that would create chaos and we certainly do not need more of that at the moment. So we should structure the closing down of banks, but is government interference really the best way. I personally do not believe so, as you say in German, it is introducing Lucifer to the Devil. Once the state has control, it does not give it back. Generations before us have tried to fight it and we are undoing their deeds by giving the power back to the government. However, the question remains, how else can one solve the problem, in a world which has become so hysteric, which takes decisions impulsively more often then really thinking them through.

Reading the different newspaper coverage on this topic was rather interesting this week. I thought I would have a look at what the American papers right and what more international papers had to say. I looked at the Austin Business Journal, which doesn’t even feature the story, which I thought was rather odd, considering the impact of the story. However, other American papers such as CNN gave a very detailed report of what happened on Friday and which banks exactly were involved, but they did not offer much insight into the future or the past, but at least they gave some reasoning for the occurrences.

As always I red my Swiss newspaper, NZZ, the article was very short this time just like the BBC article. To my astonishment they literally copy pasted and translated word for word two paragraphs from the Washington Post article, doesn’t seem like they had much indicative to really do some background search. It was otherwise informative and kept to a minimum. The Washington Post article was trying to give a little bit of information, so that people would more or less be aware of what is happening and what it to be expected however, every other paragraph would be a reassuring one, they are probably tying to condense the panic.

My favourite article was the Bloomberg one, it had everything in it. What happened, what led to it, what can we expect for the future, how has it affected the people who work for the banks etc… it was an easy read, good for those who already have prior knowledge and perfect for those who are a little lost on the topic. I also enjoyed the fact that the article was sincere, it said that more problems were to be expected, what the truth looks like more or less with the FDIC. It was a very well research article and I would recommend that whoever is interested by this topic should read it. Reuters and the International Herald Tribune articles were very similar to the Bloomberg one, as the International Herald Tribune was solely based on the Reuters article and their facts. There was however one discrepancy it seems, as Bloomberg suggested that in 1992, 179 banks had to be closed and Reuters information says that it was 181, I do not know which of both is correct, but I was “astonished” to find this in two such renowned newspapers.

For my introductory question, I do not have the answer I guess we will have to wait and see.

Till next week.


Sources used:

NZZ
In den USA gehen immer mehr Banken pleite
24.10.09
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/banken_pleiten_usa_einlagensicherungsfonds_fdic_1.3917431.html

Bloomberg
U.S. Bank Failures Exceed 100 for Year, First Time Since 1992
24.10.09
http://www.bloomberg.com/apps/news?pid=20601103&sid=a464OcFDguyw

Reuters
UPDATE 2-U.S. bank failures pass 100 mark for 2009
24.10.09
http://uk.reuters.com/article/idUKN2312835020091024?pageNumber=2&virtualBrandChannel=0&sp=true

Washington Post
Bank failures hit 106 for year; many more are weak
24.10.09
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/24/AR2009102400301.html

Austin business journal
http://austin.bizjournals.com/austin/latestnews.html
No entry of this pretty vital news

BBC News
US bank failures top 100 for year
24.10.09
http://news.bbc.co.uk/1/hi/business/8323565.stm

CNN Money.com
23.10.09
Bank failures stack up: Now 106 for 2009
http://money.cnn.com/2009/10/23/news/economy/bank_failure/index.htm

International Herald Tribune
U.S. Bank Failures Pass 100 For 2009
23.10.09
http://www.nytimes.com/reuters/2009/10/23/business/business-uk-banks-failures.html?_r=1&scp=1&sq=us%20bank%20failure&st=cse

The giant owns up to its name, by maintaining its monopoly position

Google

The third quarter results have been overwhelming the media, since last week, again news headlines seem to have a positive spin to them, at least concerning Google.

Google stunned even the analyst with its third quarter results, catapulting its share prices up, to nearly 4% on the same day, meaning a 120% rise from the bottom of late last year. Google’s net income rose by 27% to $1.64 billion, so much so that Google’s CEO Eric Schmidt announced that "While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us"

From the headlines one could deduct that the recession seems to be over, but then we are faced with news as the one from the Bank of America, were the red figures have spiralled into the billion figures. It sometimes feels as if the newspapers believe or want to believe that the world is still green behind their ears. Sudden unexpected bad news only leads uncertain investors to take impulsive decisions and sell their shares, causing massif bumps in the slow road to recovery. People need to be informed, only then shall they be able to make reasonable and thought through decisions. So why only focus on spreading the so called positive news, instead of researching and letting the world know what is happening and why.

So is the Google news for real, what are the causes for their unexpected profit? And is this sustainable or as in the case of Alcoa only the repercussions of lay offs and sever cost cutting, that shall not be in the companies best interest in the future.

What were the causes for Google’s rise in income? As any company in the recession, they have been holding down cost thanks to their new CFO, however they have not given up their expansion plans, and even during the recession took over a few small business. It is needless to say that Google holds a monopoly on the Internet market, with two thirds of Americans using its services. The decline in the dollar also seems to have been in favour of Google, as 53% of their revenues are earned outside of the US. The advertising has increase as well but, what really gave a boost was the increase in amount earned by each click on ads, in addition to the 30% rise in mobile phones accessing the Internet.

Google feels so confident about the market, that they announced that “we now feel confident about investing heavily in our future”, by acquiring one to two large businesses every year or so and hiring new staff. After this announcement share prices rose again. So was this just a way of using the situation in the company’s favor? Inducing share prices to shoot up or will they be able to follow through?

Where the recession really stand is difficult to say, it touches every company and every person differently. We all use the Internet on a daily basis; it has become part of our lives like taking a shower or should I say eating, so maybe it is normal that it should be one of the first to see the light at the end of the tunnel. However, the uncertainty of the market and the unreliability on the newspapers to a certain extent makes investor even more nervous. As one never knows how many skeletons still lie in the closet.

The newspapers I have red reported the facts, they did not seem interested in the background, the why, where, when, how and what will this lead to. A few of them such as the Times Online briefly compared Google to what shall be expected from Yahoo and also mentions possible causes of the rise in profit. The Swiss newspaper NZZ, refers to an analysts opinion stating that we should still be vary of the increase in the amount earned by advertisement, as this can fall again and shall not see too much of a rise in the near future. Just to understand how what the news is all about and how these earnings came to be I had a look at Google’s press release. To my astonishment, the newspapers seemed to have taken the story from their, in a copy paste style, there was not more much research done, then what Google presented. Although all the papers even the Daily Telegraph seemed straight forward, I felt there was a lack of personal interest by the journalists on the matter. Are they also bored of report only certain aspects of the happenings in the world?

An amusing read was the CNBC cover on this story, it is an easy read, it seems to be taken from a talk show or a blog, as it is very interactive and written in a everything but formal style, using phrases such as “grab a hanky”, “blew past earnings expectations”. It also compares Google to its competition, which makes it a good quick, interesting update on what is going on, and where the competition stands.

(please have a look at: http://www.cnbc.com/id/33343680/site/14081545 to see how the competition is holding up, compared to Google)

Well lets hope that we are on a recovery as they all say!

Till next week,

Bacio






Sources used:


Times online
14.10.09
Google
http://www.ft.com/cms/s/99fb5b2e-b893-11de-809b-00144feab49a,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F3%2F99fb5b2e-b893-11de-809b-00144feab49a.html&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3Dgoogle%26aje%3Dtrue%26dse%3D%26dsz%3D

Times online
16.10.09
Google gears up for fresh expansion
http://www.ft.com/cms/s/0/5c9961dc-b9eb-11de-a747-00144feab49a.html

Times online
17.10.09
Google poised for spending spree
http://www.ft.com/cms/s/0/4496c768-bab4-11de-9dd7-00144feab49a.html

NZZ
16.10.09
Google schreibt Rekordgewinn
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/google_schreibt_rekordgewinn_1.3876501.html

CNBC online
16.10.09
Current DateTime: 04:51:42 18 Oct 2009LinksList Documentid: 31047922
Google Starts to Bleed—In a Good Way
http://www.cnbc.com/id/33343680/site/14081545

Google online
16.10.09
Financial press release
http://investor.google.com/releases/2009Q3_google_earnings.html

Daily telegraph
15.10.09
Google profits increase 27pc to $1.64bn in the third quarter
http://www.telegraph.co.uk/technology/google/6341069/Google-profits-increase-27pc-to-1.64bn-in-the-third-quarter.html

Alcoa

I choose this topic, as we are all affected by this financial crisis in one way or another; we have and are all suffering due to it. Since the headlines have shown a rather positive look on the market with the 3rd quarter results of Alcoa, I felt the urge to read up on the matter and make up my own opinion, is the economy really recovering as they say, or was it due to restructuring and lay-offs that these results have occurred.




It seems that the world is starting to recover from the global financial crisis, at least according to the headlines. After the unexpected results of Alcoa, the markets have seen an increase in confidence from the investors, but does this confidence really have the necessary groundwork?

Alcoa is as always the first of the Dow Jones Industrials to report its quarter results, thus a lot of eyes rest upon it, increasing the pressure for the company to perform. For the 3rd quarter analyst were predicting a 9% loss but instead Alcoa present a 77 million dollar net profit. The CEO of the company claims that this is due to the increase in aluminium demand, however a little dig into the Alcoa recent pass shall show you that not only an increase in demand was the cause for this rise in profits.

Alcoa has cut 19,000 jobs since the beginning of this year, their was a 83% reduction of the 2.4 billion annual cost, this was done through reducing the number of contractors, through freezing its hiring, companies operations upgrading was drop by 50% and Alcoa has rid itself of its daughter firms which have generated losses. So this leads one to ponder how much of this net profit is really due to a recovering economy or is it all due to the restructuring. Will this become the new trend? Are we not investing into the future anymore? This cost reduction can not go on forever, as this would also have negative effects on the economy in the long run. So will there be another drop in the economy due to the cutting cost measures taken?

It seems many people stay optimistic, the Dow Jones has increased due to the good news, and there has been a positive global reaction to the Alcoa news, an 11% increase in aluminium is expected in the near future. Reuters online also mentions that this is a sign that the key markets are stabilising and are expecting another increase for the 4th quarter. Only a few newspapers warn of the still possible dangers, the NZZ (Swiss paper), warns that rest of the quarter reports are still to be expected and not all of them seem to be in a positive light, such a CIT Group, which stands close to bankruptcy. The International Herald Tribune also warns that some analyst “caution that the market remains weak and might have a negative impact on the future of Alcoa”. Bloomberg also mentions that Alcoa still has to face “headwinds in foreign currency and energy costs”.

There are no definite answers to the posed questions, personally I believe that the market is recovering too quickly and using all available methods to do so. However, in my opinion this shall lead to another drop in the world economy, not such a blast as the one of 2008/2009, but we shall be thrown back again. The global markets is all a mind set of the masses, if there is a general believe and confidence in the market, then we shall see one, as people will start buying again, they shall go back to a more normal way of life, without worrying about every penny and their job.

For this blog I looked at a wide array of newspapers, this time I felt this is a very important story and thought I best to compare it to newspaper that can hold their weight and not to tabloids. In general I found the NZZ, Bloomberg, Financial Times and International Herald Tribune articles to be straight forward, based on facts and figures portraying a positive market outlook, but also warning of being to overly enthusiastic, yet generally being neutral and objective.
BBC, Times Online and n-tv (German newspaper) both state the facts of the day, with no possible consequences, naming no causes, simply adhering to the facts and figures of the day, not too informative at the end of the day. Although digging back into story, Times Online did not always seem to favour the methods used by Alcoa to obtain better results.
The Financial Times also posted a video explaining what is to be expected from the 3rd quarter results according to Reuters, this is professional in terms of content but I find they should really get a new analyst, as this one simply is not up to the task. (Unfortunately my computer wont allow me to upload this video please have a look at it on http://www.ft.com/cms/s/0/3c6f8692-b42e-11de-bec8-00144feab49a.html).


Till next week.



Sources used:

NZZ:
09th October
Optimistischer Start der amerikanischen Berichtssaison
http://www.nzz.ch/nachrichten/wirtschaft/boersen_und_maerkte/alcoa_und_pepsico_befluegeln_us-boersen_1.3829201.html

08th October
Alcoa-Ergebnis beflügelt die Weltbörsen
http://www.nzz.ch/nachrichten/wirtschaft/boersen_und_maerkte/alcoa_kehrt_ueberraschend_in_gewinnzone_zurueck_1.3820213.html


n-tv:
10th October
Dax-Vorschau
http://www.n-tv.de/wirtschaft/marktberichte/Hohe-Erwartungen-an-Bilanzen-article542110.html


Times Online:
January 6, 2009
Alcoa will cut 15% of workers as crunch bites
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5462588.ece

October 9, 2009
Mining sector underpins investor confidence
http://business.timesonline.co.uk/tol/business/markets/article6867071.ece


Financial Times:
8th October
Short View: Earnings season begins
http://www.ft.com/cms/s/0/3c6f8692-b42e-11de-bec8-00144feab49a.html


Bloomberg:
8th October
Alcoa’s Faster-Than-Expected Cost Cuts Yield Profit
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqTkObL.UZ5A


International Herald Tribune:
8th October
After Heartening Reports, Shares Rise
http://www.nytimes.com/2009/10/09/business/09markets.html?_r=1&scp=2&sq=alcoa&st=cse


8th October
Alcoa Stock Up After Profit Wall St Didn't Expect http://www.nytimes.com/reuters/2009/10/08/business/business-us-alcoa.html?scp=9&sq=alcoa&st=cse

BBC:
7th October
Alcoa announces surprise profit
http://news.bbc.co.uk/1/hi/business/8296057.stm


Reuters:
8th October
Alcoa stock up after profit wall street didn’t expect
http://uk.reuters.com/article/idUKN0851635320091008

The Olympics

Dear Reader,

This week I shall be writing about one of the headlines, that shaped the sporting world, the 2016 Olympics shall be held in Rio de Janeiro and not in Chicago. This shall be the first time that the Olympics are to be held in the South American continent, and proves to the world that there is much more the continent then exporting and crime. Brazil will become the sporting destination of the next decade, by hosting the 2016 Olympics and the 2014 soccer world cup. It has been a tough battle for the four potential countries, and the outcome was not cheered by all.

This event is the representation of prestige and shall bring economical uprising to Brazil, but alongside the glory of the event walk many disadvantages, some of which shall be discussed later on. This event shows the world what a powerful country Brazil has become, not only is Brazil the 8th biggest economy in the world, it was the first of the South American countries to rise out of the recession and is already ready for their next coup; hosting two of the major international events.

The Olympics are of such great importance, as the world is trying to recuperate from a global economic downward spiral, countries fought hard in trying to secure the event, in order to assure some sort of economic boost and to show the world they are still on the ball. This was the case of Chicago, the US have suffered greatly from the economic crisis and due to it they have lost some of their statue as the super power, the rest of the world has started to look beyond the American super power. This event would have given them the opportunity to demonstrate that they are still fighting, that they are a link to the world and more than capable to host such an occasion. The Olympics could have been the necessary boost for the US economy, thus Barack Obama flew to Copenhagen to try and sway the IOC into favouring Chicago as a destination, yet unfortunately for the US he was unsuccessful.

The Olympics shall allow the Brazilian economy to grow, through creating jobs, obtaining large building projects that will employ many of people, who shall then in turn spend their wages on the rest of the economy. Projects that have been suspended, such as roads and railways shall be built, and tourist shall be numerous, all factors which shall have a positive effect of a weaken economy. However, for the local people it is not always favourable, having grown up in South Africa I can see the effects that the world cup already has on the country. Prices rise, becoming nearly unaffordable for locals, although the game brings new investments; it also pushes out other investments due to the high prices. All the constructions taken up for the game are not always what is needed for the city afterwards, such as the football stadium in Cape Town, which shall not be hosting any other events after the World Cup, as the locals simply can not afford the price of a ticket.

It is said that politics do not influence the decision of the IOC, however many disagree, the IOC do have a certain political power as their decision shall alter the economy of the country they give the event to. It seems to be the current set of mind to give major international events to emerging economies, as the 2010 soccer world cup was giving to South Africa and the 2014 to Brazil, through this the emerging markets are opening up their boarders and can become interesting partners and allies. The Chicago Tribune however, does not see the benefits that such events create for the global economy, but see it as a revenge process on part of the IOC, due to long-term disagreements with the US leaders.

As this is such an international event I tried to look at a wide array of news coverage on the matter just to get a feel for how the matter is perceived in different countries. Looking at the Chicago Tribune, one gets a feel of how the Americans approach the subject, not only is the paper rather biased, giving a lot of personal insights from the author, claiming that the IOC is abusing the “power” they have “fancies itself a force of global power”, that it is the IOC method of payback: “given the IOC's Byzantine internal politics, its fractious relationship with the country whose companies have been its cash cow”. The Chicago Tribune tried to make it into an anti-American campaign, giving quotes of many unhappy Americans, who feel betrayed by the IOC. Whereas other papers such as the Economist merely stated the facts, the cons and pros of the event. The Swiss newspaper NZZ (which is liberal) headlines read “a slap in the face for Barack Obama”, although generally the article was straight forward, it seemed to be a little harsher then usual, this might be due to the on going conflict with the US government and the Swiss banks. The Daily telegraph as usual enjoyed the gossiping and taking a bias approach on the matter, focusing solely on the American defeat calling it a “humiliation” that Obama’s speech has “backfired spectacularly”.
Unfortunately my Portuguese is not on the level to be able to comprehend their take on the situation, which might have been very interesting, especially since the two countries are not opponents, but neither are they allies.

Till next week all the best,

Stella




Sources used:

The Economist:
Rio’s sporting carnival: http://www.economist.com/world/americas/displaystory.cfm?story_id=14576023#


NZZ (Neue Zuericher Zeitung)
Ohrfeige für Barack Obama
http://www.nzz.ch/nachrichten/sport/aktuell/die_olympischen_sommerspiele_2016_finden_in_rio_oder_madrid_statt_1.3767205.html


Times Online
Snub for Barack Obama as Rio hosts 2016 Olympic Games
http://www.timesonline.co.uk/tol/sport/olympics/article6859325.ece#


The Daily Telegraph
Rio de Janeiro wins right to stage 2016 Olympic Games
http://www.telegraph.co.uk/sport/othersports/olympics/6255448/Rio-de-Janeiro-wins-right-to-stage-2016-Olympic-Games.html


The Chicago Tribune
Chicago's loss shows bitter rivalry between USOC and IOC
http://www.chicagotribune.com/news/chi-olympics-hersh-04-oct04,0,7643606.column