In an apparent rejection of the basic principles of the U.S. economy, a Harvard University poll shows that most young people do not support capitalism.
1. What percentage supported socialism?
2. Why are the results of the survey difficult to interpret?
3. What did the survey say about health insurance?
4. What did you find most interesting about the results?
Ehrenfreund, M. (2016). A majority of millennials now reject capitalism, poll shows. The Washington Post, April 26 (Retrievable online at https://www.washingtonpost.com/news/wonk/wp/2016/04/26/a-majority-of-millennials-now-reject-capitalism-poll-shows/)
In the 1930s through the 1960s, most African-Americans could not get mortgages. This was because the U.S. government deemed neighborhoods where they lived ineligible for federal mortgage insurance, which was the Depression-era innovation that made mortgages widely affordable. As a result, hucksters moved in and peddled homeownership through contracts for deed, where the home seller gives the buyer a high-interest loan and a pledge to turn over the deed after 20 to 40 years of monthly installment payments. These contracts built no equity and usually resulted in default and eviction.
If you thought similar types of schemes were over in the mortgage industry, read Stevenson and Goldstein’s April 17th article.
1. Explain why contract for deeds are making a comeback.
2. What Dallas company was mentioned in the article as being the largest player in this contract scheme?
3. Unlike mortgage foreclosure, what do the contracts typically lack?
4. In the example in the article, what percentage interest was being charged? How does that compare to the current mortgage interest rate? Based on this, how much additional interest will be charged per $1,000 over 20 years?
The Editorial Board. (2016). The Racist Roots of a Way to Sell Homes. The New York Times, April 29 (Retrievable online at http://www.nytimes.com/2016/04/29/opinion/the-racist-roots-of-a-way-to-sell-homes.html).
Stevenson, A. and M. Goldstein (2016). Wall Street Veterans Bet on Low-Income Home Buyers. The New York Times, April 17 (Retrievable online at http://www.nytimes.com/2016/04/18/business/dealbook/wall-street-veterans-bet-on-low-income-homebuyers.html).
Swift — the Society for Worldwide Interbank Financial Telecommunication — is billed as a supersecure system that banks use to authorize payments from one account to another. However, last week, Swift announced that hackers had captured $81 million from Bangladesh’s central bank in February and that other similar heists have been attempted.
1. According to Chris Larsen, the founder of a financial technology company, what is wrong with Swift?
2. What were some of the internal control problems at the Bangladesh central bank?
3. Why was the timing of the malware attack perfect?
4. What was the most interesting thing that you learned from the article?
Corkery, M. (2016). Hackers’ $81 Million Sneak Attack on World Banking. The New York Times, April 30 (Retrievable online at http://www.nytimes.com/2016/05/01/business/dealbook/hackers-81-million-sneak-attack-on-world-banking.html)
To improve the reputation of the University of California, Davis, and its Chancellor, Linda P.B. Katehi, after the November 2011 pepper spraying of students, the university contracted with consultants for at least $175,000 to scrub negative online Internet postings about the incident.
1. Explain what percentage the strategic communications budget increased by from 2009 to 2015. Based on your reading of the article, what were some of the reasons?
2. What type of consultants do you think they contracted with?
3. What other controversies are associated with the Chancellor?
4. Do you think that the school acted ethically and/or legally in the incident and scrub-up?
5. What was the most interesting item that you read about in this article?
Stanton, S. and D. Lambert. (2016). UC Davis spent $175,000 to scrub online pepper spray references. McClatchy, DC, April 13 (Retrievable online at http://www.mcclatchydc.com/news/nation-world/national/article71700862.html).
Under legislation passed by Congress in 2014, potential cuts are possible for the first time for financially distressed multi-employer pension plans who want to reduce benefits for retirees in order to improve the solvency of the fund.
1. Which fund is among the first to apply to take advantage of the legislation and who are their constituents?
2. How long has pension security been protected according to the article?
3. How effective is the Pension Benefit Guaranty Corporation in bailing out pension funds and why?
4. What caused the investment imbalance in the Central States Pension Fund?
Source: Marte, J. (2016). One of the nation’s largest pension funds could soon cut benefits for retirees. The Washington Post, April 20 (Retrievable online at https://www.washingtonpost.com/news/get-there/wp/2016/04/20/one-of-the-nations-largest-pension-funds-could-soon-cut-benefits-for-retirees/?hpid=hp_hp-more-top-stories_pension-711a%3Ahomepage%2Fstory)
According to the New York Times, a recent study shows that 90 percent of companies in the Standard & Poor’s 500-stock index reported non-GAAP results last year, which is up from 72 percent in 2009.
1. Do you think investors truly understand the consequences of this?
2. Which one of the tactics used do you find to be the most troubling?
3. Why do you think the SEC has not been more aggressive in stopping this practice?
Morgensen, G. (2016). Fantasy Math Is Helping Companies Spin Losses Into Profits. The New York Times, Apr. 22 (Retrievable online at http://www.nytimes.com/2016/04/24/business/fantasy-math-is-helping-companies-spin-losses-into-profits.html)
While some thought this was an April Fool’s joke, Amazon assured them that the new Dash Button is a serious device to buy that one item that you always need!
1. Approximately how many brands and how many devices does Amazon have on dash buttons?
2. What are the charges associated with a Dash button?
3. What are the risks of the Dash Button?
4. Would you use it? Why or why not?
Wingfield, N. More Brands Mean Many More Buttons for Quirky Amazon Service. The New York Times, March 31 (Retrievable online at http://www.nytimes.com/2016/04/01/technology/amazon-widens-its-push-button-e-commerce-horizons.html)
The Monyak family decided to board their 2 dogs when they took a vacation in France. The Monyaks gave special instructions to the caretakers to give an anti-inflammatory prescription to one of the dogs. Unfortunately, the kennel gave it to the wrong dog who died from an overdose shortly after the family returned. The Monyak’s sued The Inn, one of five Atlanta-area kennels run by Barking Hound Village that advertises its “private suites and secluded areas for rest and relaxation.” The question of damages has made its way to the state’s highest court.
1. What have courts typically upheld in these types of cases?
2. What is Barking Hound Village’s view as filed in their brief?
3. Why is the kennel’s argument hypocritical? What do you think this will do to the image of the company and its future viability from a cost benefit standpoint?
4. What is unique about a pet’s value and how would you argue this case from a pro-pet position?
Brulliard, K. (2016). How much is a pet dog worth? A court will soon decide. The Washington Post, April 12 (Retrievable online at https://www.washingtonpost.com/news/animalia/wp/2016/04/12/how-much-is-a-pet-dog-worth-a-court-will-soon-decide/?hpid=hp_hp-more-top-stories_animalia-petworth-220pm%3Ahomepage%2Fstory)
According to the Washington Post, five of the country’s largest banks, including JPMorgan Chase and Bank of America, still do not have credible plans for winding down their operations without taxpayer help if they start to fail.
1.How long do these banks have to submit their detailed bankruptcy plans to requlators?
2. What are the consequences if they do not meet this deadline?
3. What was the name of the 2010 legislation that is aimed at preventing a repeat of the taxpayer bailouts?
4. What companies have regulators identified as financial firms, apart from banks, that could pose a threat to the economy?
5. Why does GE claim that it is no longer one of these threats?
Merie, R. (2016). Regulators reject plans of 5 big U.S. banks for preventing another taxpayer bailout. The Washington Post, April 13.(Retrievable online at https://www.washingtonpost.com/news/business/wp/2016/04/13/regulators-reject-the-plans-of-5-large-u-s-banks-for-preventing-another-taxpayer-bailout/?hpid=hp_hp-top-table-main_banks-835am%3Ahomepage%2Fstory).
For wealthy Americans looking to veil their assets and shield some of their income from taxation, there is no need to go to Panama or any other offshore tax haven. According to the New York Times, it’s easy to establish a shell corporation right here at home and virtually no questions are asked.
1. What states did the article mention in particular?
2. About how much of the world’s financial wealth is hidden in offshore accounts? Percentage and dollars?
3. Explain why American banks are awash in money from foreign investors using shell corporations?
4. What is the U.S.Treasury doing to combat hidden wealth?
Cohen, P. (2016). Need to Hide Some Income? You Don’t Have to Go to Panama. The New York Times, April 7 (Retrievable online at http://www.nytimes.com/2016/04/08/business/need-to-hide-some-income-you-dont-have-to-go-to-panama.html)
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