Check out the following articles today for all Business and Economic students who want to stay up to date.
Article 1. Bailout Future
Article 2. Aer Lingus Industrial Relations
Accounting, Business, Business Studies & Economics – Mr. Hannon, St. Gerald's College, Castlebar, Co. Mayo, Ireland.
The recent trend of companies cutting costs i.e. downsizing or restructuring, continues with the news this week that Aer Arann is laying off 25% of its workforce and Yahoo are planning to cut 10% of its workforce worldwide. The effects of the global recession continue.
The dollar continues to rise in value against the Euro. The current exchange rate is now €1= $1.28
The Euro continues to decline as the ECB is expected to cut interest rates in the next 6 months.
For those studying Economics: Why would interest rates have an effect on the exchange rate?
I will be posting next week about Business on the Web – podcasts, videos and other business websites. Meanwhile, Yahoo have a section on their site called Yahoo Answers. This is where the public can ask questions and share information. Take a look at the Business & Finance page on Yahoo Answers.
As you know, Youtube is not available in school. So, the remainder of this post will be blank if you are on the school network. Here is a good video on Warren Buffett by a Youtube user.
Gordon Gekko – Greed is Good
The fallout from the subprime crisis continues. On Monday, Germany had to rescue Hypo Real Estate, the country’s second biggest mortgage lender at a cost of €50bn.
On Wednesday, six of the world’s Central Banks announced a co-ordinated 0.5% reduction in interest rates to help the financial system. The UK government also announced a £64bn financial package to help all the major UK banks. They may even take shares in these banks in the future i.e. nationalisation.
Even a country is now in danger of going bankrupt. Iceland’s banks, having enjoyed years of enormous growth, are now experiencing liquidity problems. The value of these banks once outstripped the country’s GDP. The Icelandic stock market has collapsed, inflation has soared and the Icelandic krona has fallen sharply in value.
The credit crunch is now also having an effect on clubs in the Premiership and FIFA have warned clubs with excessive debt that they may be excluded from certain competitions.
Watch this Youtube video to get a different explanation of the subprime crisis.
Is this a case of insider trading?
This week we talked about downsizing or companies restructuring their operations. This is going to become more common as companies have to cut costs in times of recession. Three companies announced rationalisation plans this week – Aer Lingus, HP and Ebay.
An Irish Dragons’ Den on RTE in 2009. Do you have a good idea?
On Monday we will be starting Unit 4 on Enterprise.
The Ernst & Young Entrepreneur of the Year awards will be starting on RTE1 next week. There will be a weekly programme on RTE1 on Thursday night. It’s worth watching.
Another busy week for business news. Here’s a brief summary of developments during the past week.
This was caused by the collapse of UK bank Bradford & Bingley and the large Dutch/Belgian bank Fortis last weekend. The failure of the US House of Representatives to back George Bush’s $700bn plan to help US banks and the collapse Wachovia, the fourth biggest bank in America, also sent stocks lower.
However, you need to put Monday’s fall in the Dow Jones in context. It was not the biggest daily fall in the Dow in percentage terms, only in points terms. The Dow fell 777 points but the percentage fall was 7%. The last big daily fall in the Dow Jones was 22% in the 1987 stock market crash. Read the following article and see how large falls in the Dow Jones occur every 7 years.
On Tuesday, there were rumours that at least one Irish bank was in danger of default. The government quickly responded by guaranteeing the safety of all deposits in the six Irish commercial banks – AIB, Bank of Ireland, Anglo Irish Bank, Permanent TSB, Irish Nationwide and EBS.
They have also guaranteed the repayment of loans given to these banks by other financial institutions. The total cost of this guarantee could reach €500bn. This is over twice our annual GDP and over 14 times our National Debt.
Question: What effect will the above guarantee have the Irish operations of UK and foreign banks here?
On Wednesday, the CSO released the latest unemployment statistics for Ireland. The number of people unemployed has increased by 50% or 80,000 people in one year. This is the biggest ever annual increase in the Live Register. Our unemployment rate (6.3%) is now the highest it has been in 11 years and is likely to reach 9% in 2009. Download the CSO report.
On Wednesday night, Warren Buffet made his second big investment in a week when he purchased $3bn worth of stock in General Electric and the option to buy $3bn more over the next five years. This follows his $5bn investment in US bank Goldman Sachs last week. He made a profit of $783m in one day in Goldman Sachs.
On Thursday, Facebook announced that it has chosen Dublin as its European Headquarters. Dublin is now the European HQ for internet companies such as Ebay, PayPal, Google, Yahoo and Amazon. They will be creating 70 jobs in Dublin. These are now the types of jobs that will be created in Ireland in the future. What type of workers are Facebook looking for?
For example: Is this a case of a change in work practice?
And finally, another example of an organisation not taking data protection seriously. I’m sure Newcastle and Ireland keeper, Shay Given, would agree.
Keep up to date with all the daily business news on Down to Business.
Is this a case of breach of contract?
“Be greedy when others are fearful” – Warren Buffett. Will he be proven right?
Another reason for Mike Ashley to sell Newcastle FC. The risks of short-selling.
Is this insider trading?
Ireland is now in recession. A recession is defined as two consectutive quarters of negative economic growth. In the first half of 2008, Ireland’s GDP declined by 1% and GNP by 2.1%. Ireland is first country in the Eurozone 15 to go into recession. Read more>
Bono and Bob Geldof are in New York this week lobbying world leaders at the UN on the need to deal with the issues affecting Africa – debt, aid and trade. Bono and Geldof are co-founders of the One Campaign, a highly influential pressure group. Bono is blogging this week from New York. Read his blog>