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Being Rich is Not An Easy Goal April 17, 2007

Posted by Elaine in Consumers, Finances, Public Interest.

I have heard once that the majority of adolescents had said that their ultimate goal is to become rich in life. So many people have the same goal, yet only a certain percentage are ever able to achieve this. I came across an interesting article that features a young couple, both earning a combined six-digit income. They want the typical American lifestyle, get married, buy a house, and put money away for their kids’ education. These hard-working Americans however, only have a few hundred dollars in their savings account and approximately $40,000 in debt.

This is the normal trend for people these days. With the ability to “buy now, pay later,” credit accumulates tremendously. Everyone wants the American life with their own house early on in their lives, and hence, they spend and buy things on credit.

CNN money gives us advice on how to prevent this crisis. Start saving early. It seems like common sense, but it is actually much harder than it sounds. Most people spend their money on things, and leave their “leftovers” in their savings account. This is apparently the wrong way to go about it. We should put a set percentage in our savings account, and then pay off other things. If we invest $10,000 at age 30, it will grow to $100,000 by retirement. If we waited to invest this $10,000 at age 40, it will only grow to about half of that.

This article makes me think that it is never too early to start saving. It sounds like a foolproof plan, but do we have the discipline as American consumers to do so?


SEC open to introduce arbitration April 16, 2007

Posted by Brian Mulligan in Finances.
1 comment so far

Companies paid out just shy of 5 million dollars in shareholder’s lawsuits in 2000 and in 2006, US companies shelled out over 17 million dollars in lawsuits ranging from securities fraud and accounting irregularities. The sudden jump in money paid to shareholders and clients involved in disputes between the company and them has sparked the SEC to take action and consider opening the door to arbitration.

Arbitration is defined by Yahoo.com as:

The process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent or statutory provision.

This move will allow companies to settle their disputes with the shareholder’s outside of the court room or in non-jury settings. This will mitigate the cost of court fees for the company and the shareholders, but consumer’s are unhappy about the power that this change will give the companies. They feel that the SEC is siding with the companies and taking the power to sue away from the shareholder, but this may have been a long time coming.

In the past, some companies, mainly brokerage firms, have made client side agreement in their contracts that allow for arbitration. The chairman of the SEC is shooting the limit excess securities litigation that has skyrocketed in this country. As mentioned before, the consumer feels that this empowers the company because in a arbitration talk, the company can withhold information and are conducted in private.

The SEC has planned to satisfy the consumer as well. They are considering a radical change to shareholder’s involvement in the actual company. The SEC staff is studying whether corporations should be permitted to amend their bylaws to allow for arbitration, a change that in some cases might require shareholder approval. Also, the SEC is considering whether companies should allow shareholders to vote in ballot on the board of directors, etc.

The SEC’s move has sparked controversy in the financial world. As quoted from an article in the Wall Street Journal titled “SEC Explores Opening Door to Arbitration,”

If the move toward arbitration gathers steam, some consumer groups may worry that by curbing shareholder litigation, the nation will lose a powerful deterrent to corporate wrongdoing. Individual shareholders might also have to incur the expense of hiring a lawyer, rather than simply signing on as a member of a class.

The SEC would then have the challenge of deciding how to protect the shareholder in the arbitration process. This change was very interesting to see how the SEC is trying to change how clients, shareholders and companies interact. Do you think that SEC should continue pursuing this? Any recommendations for other changes that can be made by the SEC to help lower settlement costs for the company?

Citigroup April 11, 2007

Posted by collage9 in Finances, Organizational Design, Public Interest.

Citigroup, the nation’s biggest bank, just announced that it will be cutting 17,000 jobs.  About 7,300 of these job cuts will occur within the U.S.  The bank is doing this in an effort to dramatically decrease costs, which have been growing much faster than revenues recently.  Citigroup says that $10 billion will be saved through the domestic job cuts alone.  This is of course an enormous amount of money and seems as though it should help the company.  Especially due to the recent presuure they’ve been receiving from shareholders to improve their bottom line.

But, I wonder if this is indeed the best move for the company.  The article also went on to say that perhaps Citigroup should be more concerned with increasing revenues rather than decreasing costs.  It seems as though it is just sending a message to their investors that they are attempting to do something to fix the problem.  I think they should definitely be concentrating on increasing revenues as opposed to simply decreasing costs.  The cost cutting seems more like a temporary remedy to the problem, a problem that won’t go away until the bank makes other changes.  Citigroup claims that the job cuts will increase efficiency and eliminate overlapping jobs, but critics continue to be skeptical if this appraoch will actually work.

Business Week’s 50 Top Performers March 20, 2007

Posted by Stephanie in Customer Service, Finances, innovation, Internet, Manufacturing, media, pharmaceutical, Public Interest, Retail, Technology, telecommunications.


Business Week recently announced its yearly 50 Best Performers article in the March 26, 2007 edition of the magazine. When first looking even at the title of the article I was skeptical about how these companies were selected. It seems impossible to compare every company in every sector and rank their performance. I was pleased however to find their criteria for making the selections seems to be as fair as possible.

Financially they use specific criteria and what they look for in companies when making this list. The two principal financial figures Business Week uses in its analysis are average return on capital and sales growth over the past 36 months. They also consider the importance of examining sectors separately, as factors within one particular sector may inflate or deflate the appearance of a company’s performance unfairly.

Specific quotations I highlighted when reading the article regarding what BW determines as strategies for success:

“…rewriting the rules of engagement in their industries.”

“…a deep understanding of customers, a competitive advantage that has enabled them to sell more good and services than rivals.”

“…work hard to anticipate and head off potential problems well before outsiders are even aware of these looming challenges.”

Details about all 50 companies are included in the compilation of roughly 40 pages of discussion. One particular company I had not heard of before, ranked 31 is Stryker. The company manufactures artificial joints, such as knees, shoulders and hips. Part of their success is due to the baby boomer generation who show no signs of slowing down in retirement even as natural aging takes is toll. Anther interesting aspect of the company is its preparation in changing CEO’s. As the current CEO, John Brown is planning on retiring, COO, Stephen MacMillan has had roughly 4 years to shadow and plan the transition. Both the process the company has developed for the transition and the mere fact that the CEO is not being forced out of the company it seems are two incidents not seen as often anymore.

I am still hesitant to agree that companies covering the full spectrum of all organizations and industries can not only be compared but ranked in a hierarchy. Business Week does an excellent job at attempting this challenge but I feel that some subjective factors weigh into the decision, especially between close rankings, say between spot 8 and 9.


1 Google

2 Coach

3 Gilead Sciences

4 Nucor

5 Questar

6 Sunoco

7 Verizon Communications

8 Colgate-Palmolive

9 Goldman Sachs Group

10 Paccar

11 Amazon.com

12 Cognizant Technology Solutions

13 Avon Products

14 Varian Medical Systems

15 Bed Bath & Beyond

16 CB Richard Ellis Group

17 Robert Half International

18 Chicago Mercantile Exchange Holdings

19 Adobe Systems

20 EOG Resources

21 Sempra Energy

22 Sherwin-Williams

23 Lehman Brothers Holdings

24 Rockwell Collins

25 IMS Health

26 Allegheny Technologies

27 Oracle

28 Starbucks

29 Moody’s

30 PepsiCo

31 Stryker

32 Best Buy

33 United Parcel Service

34 Apple

35 T. Rowe Price Group

36 Valero Energy

37 Constellation Energy Group

38 TJX

39 Morgan Stanley

40 Paychex

41 Coventry Health Care

42 United States Steel

43 United Technologies

44 Hershey

45 Black & Decker

46 Synovus Financial

47 Linear Technology

48 AT&T

49 XTO Energy

50 PNC Financial Services Group

Osama bin Laden and Kim Jong Il, watch out. February 28, 2007

Posted by breichen in Finances.
1 comment so far

The financial system is said to be the newest front in modern warfare. With the existence of such a distinctly globalized economy, money resulting from all sorts of transactions flows instantaneously and anonymously across all borders. This is said to be a significant benefit to low-brow money movers including but not limited to drug-lords, terrorists and rogue nations that need quick cash such as North Korea.

Kim Jong Il has a penchant for fine wines and Hollywood blockbusters.

Keeping these customers out of the global financial system is becoming increasingly difficult.

Transactions of this type do not result in the transmission of “tainted” money but is said to result in financial crises as well. The difficulty that arises here is that it is becoming harder and harder for financial institutions to know where financial risks lie, a big reason being that a great deal of this money is “hidden away on islands with variable supervision.”

The biggest problem that such fluid and mobile financial flows presents governments is that when the money is transmitted over borders and out of country of origin, these flows take potential tax revenues with them. An example of the problems this cause would be rich Western countries such as the United States that have large portions of their populations approaching retirement and requiring support, i.e. Social Security.

These countries have recently been taking initiatives to make the global financial system impervious to the debilitating side effects causd by this global system including: tax evasion, financial contagion, and financial crime. These countries are working together to force international financial centers to adopt policies of practicing bank supervision, collection of all financial information of customers and the institution, and to enforce money-laundering rules in order to limit money-laundering. This would result in more difficulty in sending so-called tainted money to offshore financial institutions to avoid scrutiny.