Articles tagged with: Economy

Lost Vegas – A documentation about the current suffering of Las Vegas

10 May 2009 Michael Szumielewski 11 Comments Economy

18 months ago Las Vegas was one of the fastest growing areas of the United States. Now the economic downturn is hitting the city hard causing unemployment, abandoned casino projects and evicting people from their homes.


The economy collapsed and Las Vegas fells it. This 25 minutes long documentation shows various examples what happens in Sin City. The reporter interviews and joins several people living in the city, amongst them police men who throw people out of their homes. Some people are forced to leave their homes even if they have the money, but rented the place and unfortunately the actual owner can’t pay his mortgage, resulting in having only 20 minutes to pack their stuff and get out. Another example of radical life changes are women once working at mortgage firms and now dancing as a strippers. The city and state is also suffering from budget cuts for hospitals, universities and so on.

I recommend watching the video if you have no first hand experiences to know what’s actually going on down there. People clearly made the mistakes to thing that the boom will last forever and that real estate is a good investment which will always raise in value making it pay for itself.

Barack’s effects on the economy

8 November 2008 Sören Zschoche 19 Comments Economy

Although I’m not an American I’m really happy to see that now for the first time in the history of the USA a man with Afro American roots became president. I think this decision has improved the image of the USA in the world very much. The image which has suffered under the government of George W. Bush, is now back with a new message “Change”. But what can the U.S. and the rest of the world expect from the new president and much more interesting which parts of the economy will benefit from him? First of all we shouldn’t expect too much from Mr. Obama, although he is a great speaker with fire in the eyes. The President-elect is facing some of the biggest problems the U.S ever had:

  • The national debt has achieved the incredible amount of $1100.000.000.000
  • The war in Iraq swallows up $5.000 per second, that’s $300.000 per minute and $432.000.000 per day
  • The climate is in danger to collapse if the world and especially the U.S. won’t come to grips with their emissions we are in danger of loosing the planet as we know it

To say nothing about the financial crisis, new conflicts with Russia, the Iran or Venezuela or just the fact that we are facing a recession which consequences can’t just be estimated right now.

So above all these points it’s hard to imagine that Mr. Obama is able to spend any money for anything at all. But the promises Barack Obama made don’t have to be mutually exclusive. For example though investments and subventions of renewable energies new jobs can be created. That has the same effect like a stimulus package. Also it’s a good alternative for searching oil in far dessert countries. So I’m sure that Barack will make affords to support renewable energies, he also promised to spend $150 billion in the next 10 years in that industry. But which companies could benefit from that?

I picked out a few companies which could theoretically benefit from his plans, but before you buy these stocks now remember, just because a stock sounds interesting it doesn’t mean that it rises. If you want to buy these watch out for the right price.

The first one is First Solar [www.firstsolar.com (NASD: FSLR)], a producer of solar panels. Solar energy will have a lion’s share at the power supply of renewable energies. So First Solar will be the first address in the U.S.

The second one is Acher Daniels Midland [www.admworld.com (ADM)], a producer of food, fertilizer but also in bio fuels. Bio fuels will be very interesting for the government under Barack Obama because they can create jobs in the farming sector as well as they can make America independent of the so called pariah states.

Other interesting companies could be Repower, Solarworld, Nordex or Evergreen Solar.

The second promise senator Obama made is to make health care affordable for many of the 47 million Americans who are currently not insured. This point will be difficult because large health insurance companies like Aetna or UnitedHealthcare fear that they might suffer under lower profits. Also I don’t know if America is ready for so a social system, yet. Perhaps that’s why Obama didn’t say something concrete about this point, yet. But if a company would benefit from that it would definitely be Community Health Systems [www.chs.net (CYH)]. Community Health Systems provides hospitals and hospitals would be the direct winners of any health care plan. But you can of course disagree with me in this point.

So I hope that Barack Obama will be able to put his plans into practice. However I think many people believe in him and faith can be the beginning for “Change” also when it seems to be very difficult.

What’s your opinion? Do you know companies, that are likely to benefit from Mr. Obama’s plans? Please write a comment and let us know!

The Robotalisation – a theory of a new economic revolution

1 August 2008 Sören Zschoche 3 Comments Economy

In the late 18th century our economy has changed, modern machines were rolled out, the division of labour was founded and the people started to work in big factories where they were specialised on different work steps. We called this process industrialization and it changed the way we worked and lived in many ways. Now, nearly 300 years later, we are facing a new revolution which sadly hasn’t got a name yet, so I fell so free to call it “robotalisation” temporary.

I want to introduce you to this post with a law of the famous computer scientist Gordon Moore which says that computer systems are doubling their performance every 18 months, so if we keep on doubling our computer performance at this rate we could theoretically be able to create humanoid artificial intelligence within the coming 30 – 50 years. That’s philosophically speaking – but it’s a fact that there are already dozens of wise folks in many universities and companies today who are doing research on artificial intelligence and new robotic technologies.

But what happens if the artificial intelligence of the machines is developed so far that it could replace the humans? A famous economist once called this situation a paradox and explained this way: if somebody in a cinema stands up he has an advantage because he sees better; but if everybody stands up everybody sees worse. So if one businessman replaces his workers by machines, he will surely have an advantage, but if everybody does it, everybody will have a disadvantage because the businessmen can’t sell their products anymore or rather the people don’t have the money to buy the products because they’re unemployed. The shear between the poor and the rich people would separate enormously and our economic system would not work anymore.

That would be the worst case. But as the old Chinese philosophy yin yang once told us that every shadow also has a sun, there is an enormous potential in this technology, a potential which could not just change our economy but could change the way we live on this earth and how we treat each other and our planet. Theoretically, we got the chance to create a world where everybody has access to all tangible values. A world without poverty, ecological destruction and wars. A world where people are free to decide what to do with their lives. But that’s just a dream, fact is that we have to find a new economic system, a system which is based on brain work and intellectual property.

Also we should not ignore this process because there are already thousands of industrial robots worldwide working in factories at the same assembly lines where the industrial revolution began 200 years ago and where humans worked 50 years ago. So in my opinion the robotalisation has already started by now. After the assembly line workers many jobs of the service sector will follow geriatric nurses, cashiers, charwoman… – all jobs which could possibly be replaced by robots within the next decades.

The world’s biggest companies in 2008

17 April 2008 Michael Szumielewski 7 Comments Companies

Do you know what are the biggest companies on earth? Well, Forbes.com once again made a huge list of the The Global 2000 from 60 countries. The composite ranking is simply based on sales, profits, assets and market value. This is important because one metric alone can give a false impression about corporate size.
In total, the global 2000 companies now account for $30 trillion in revenues, $2.4 trillion in profits, $119 trillion in assets and $39 trillion in market value. Around the world, 72 million people work for these companies.
So, here are the top 10 companies in 2008 from The Global 2000 list by Forbes.com

Rank Company Country Industry Sales ($bil) Profits ($bil) Assets ($bil) Market Value ($bil)
1 HSBC Holdings United Kingdom Banking 146.50 19.13 2,348.98 180.81
2 General Electric United States Conglomerates 172.74 22.21 795.34 330.93
3 Bank of America United States Banking 119.19 14.98 1,715.75 176.53
4 JPMorgan Chase United States Banking 116.35 15.37 1,562.15 136.88
5 ExxonMobil United States Oil & Gas Operations 358.60 40.61 242.08 465.51
6 Royal Dutch Shell Netherlands Oil & Gas Operations 355.78 31.33 266.22 221.09
7 BP United Kingdom Oil & Gas Operations 281.03 20.60 236.08 204.94
8 Toyota Motor Japan Consumer Durables 203.80 13.99 276.38 175.08
9 ING Group Netherlands Insurance 197.93 12.65 1,932.15 75.78
10 Berkshire Hathaway United States Diversified Financials 118.25 13.21 273.16 216.65

The positive aspects of a recession

8 April 2008 Michael Szumielewski 44 Comments Economy

As Joseph Schumpeter passionately argued in his 1942 book Capitalism, Socialism and Democracy, recessions are a necessary evil in capitalist societies. Well, there are some arguments, that back up this theory. Although the word recession strikes fear into the hearts of people, recessions heal the economy from unrealistic developments and creates opportunities for investors. In the long run it is just a periodic downturn in the economic cycle and for some good reasons it seams.

Effects on the economy

Recessions correct economic imbalances and helps the economy to get back to a healthy, realistic, and sustainable rate of growth. The “job” of a recession is to clean the “fat” out of the system, mop up excess, and pave the way for the next expansion. However, there are always bankrupts, but in a recession the weak companies get put out of business and the strong ones are forced to optimize their business models and come out with better products. This brings job losses which are freed up to be efficiently used somewhere else in a flexible market. Recessions also eliminate these sorts of unsustainable bubbles like the technology bubble in the late 90s or the actual housing crisis. Of course, it hurts to lose a good paid job and suffer from financial loss, but it is necessary for our economy to become healthy once again.

The Stock market drops

Stocks markets go down in recessions, but as stated in one of my previous articles, Search for opportunities in crises, there are great opportunities in stock market declines. During periods of mass panic on the market all stocks go down for a while, because people like to panic somehow, I don’t know why. The important thing is, both good and bad companies go down. This means, that you can get high quality companies at a low price and with good long-term perspectives. That’s the time to position yourself to profit from these companies and catch the opportunity while it is there.
In fact, I even know a few investment guys, who are really cheered up and looked forward to the upcoming recession because of new investment chances.

Personal finance

According to a report by CNN, I found on moneysocket.com, the average American owes $10,000 in credit card debt annually. If people will ever recognise this misbehaviour, it maybe will happen during a recession. Although, I don’t believe people are easy to change, I think if suffering from financial loss, unemployment and hard times, maybe they start to think about there personal finances and learn something from it.

As we know from the past, a recession lasts for about 10 months, so good times will be back. Nevertheless, they are necessary and you will experience a few recessions in your life, so better be prepared. The important thing is not to panic and learn from crises. In fact, recessions can make you better and more skilled after all, just like they do with our economy on a regular basis.