Monday, July 6, 2015

Brazil 7, California 8 - California 7, Brazil 8

This time every year the University of La Verne welcomes business students seeking a certificate in management for this three week study, the majority of the students are from Brazil. This year 247 are attending, studying courses in Accounting, Finance, Marketing, Management, Public Administration, Strategy, and of course Winning in Las Vegas.

The last few quarters Brazil and the great state of California have been battling for the 7th position in the world’s largest economies. Yes, California is that big.

But all is not well in Brazil: Brazil’s economic catastrophe – Just five years ago, Brazil was being touted as an emerging new world power, with a booming economy growing by 7 percent a year, escalating middle class, and major oil reserves discovered off the coast.  But now the economy has stagnated and is about to tip into its worst recession in 25 years. Inflation has soared to 8 percent, and widespread corruption has undermined the economy. President Dilma Rousseff is now widely scorned as corrupt and incompetent.

Brazil was hit by a perfect storm of economic disasters. It is still a commodities-producing country, heavily dependent on exports of its crops and natural resources. In the past year the economies of the countries that buy its goods, particularly China and Germany, have slowed, drying up demand. The prices of its main exports have plummeted; Oil, sugar, coffee, and soybean prices are all down by as much as 33 percent. The Brazilian real, has lost a quarter of its value this year alone. Drought has produced an acute shortage of water and hydroelectric power, meaning soaring electricity prices.

Government debt interest rates are now past 13 percent, too expensive to borrow additional capital. President Rousseff is trying to heal the economy by belt-tightening-but for people to accept lower salaries, they must have faith in government policies, and Brazil is notoriously corrupt.

What next? As public sector workers face cuts in salaries and benefits, they are striking all across the nation. Brazil may be reaching its boiling point.

COLLEGE CHRONICLES – The department's "state authorization" regulations are finally on the books, four years after they were established. Though colleges' time to comply with the new requirements is technically up, institutions in states still putting in place a sufficient process for oversight and approval "may have their current status continued for a reasonable period," Education Department officials said in a Dear Colleague letter last month. And individual approvals won't really come up until the department conducts its regular program reviews; at that point, colleges' eligibility for federal financial aid could be on the line.

- And lower student loan interest rates take effect July 1, for new borrowers seeking funds for the 2015-16 academic year. The rate for undergraduate Direct Loans fell from 4.66 percent to 4.29 percent. Graduate and professional Direct Loan borrowers will pay 5.84 percent, down from 6.21 percent last year. And interest for Direct PLUS Loans now stands at 6.84 percent, compared with 7.21 percent in 2014-15.

UNIVERSITY OF PHOENIX SIDESTEPS OBAMA: The University of Phoenix has engaged in an aggressive strategy to recruit on military installations that includes sponsorships of rock concerts, Super Bowl parties and father-daughter dances, according to the Center for Investigative Reporting. The recruitment efforts evade a 2012 executive order signed by President Barack Obama, meant to prevent for-profit colleges from gaining preferential access to the military.

The Apollo Education Group, which owns the University of Phoenix, shared a statement that it had sent the center defending its programs that it says play "an important role in offering career relevant higher education degree and credential education programs to active-duty service members, veterans and military families.

INSIDE JEB'S TAX RETURNS - Bush's firm made him rich - and built nest egg for family: Shortly after Jeb Bush left the Florida governor's office in 2007, he established his own firm, Jeb Bush & Associates ... More than a third of the firm's $33 million in proceeds from 2007 to 2013 came from banking giants Lehman Bros. and Barclays, which paid Bush a combined total of about $12 million for his work as a senior adviser ... An additional $8.1 million ... came from speaking fees. 

More than a third of his company's income was from sources that his campaign has largely declined to disclose. Bush's small firm paid more than $2 million in wages over seven years. A large share of that money appears to have gone to his youngest son, Jeb Bush Jr., 31, who worked as a management consultant. ... Bush's wife, Columba, ... was collecting an annual salary that averaged about $31,500 - totaling more than $220,000 over seven years.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: 50 Cent (40), Susan Ford Bales (58), Huey Lewis (65), Nancy Reagan (94).

GREECE CRISIS – On a December night in 2009, two larcenous officials in Pangaio, in the mountains of northern Greece, lured the town’s mayor to a rendezvous on a quiet coastal road. Fearful that state auditors were about to expose the three men’s systematic looting of the municipal treasury, they shot their co-conspirator to death with an Uzi submachine gun to silence him, then jammed his corpse into the trunk of his car, where it was found three days later. The killers were sentenced to lengthy jail terms, but – this being Greece, a country notorious for its bloated work force and a safety net that even protects the jobs of convicted criminals – they continued drawing a portion of their salaries while sitting in prison. “They Murdered the Mayor but Still Get Paid!” ran the headline in one Greek newspaper. This dysfunction is at the heart of Greek society and how it has led the country to an economic meltdown.

GREECE TO CREDITORS: DROP DEAD - Greek voters on Sunday sent a clear message to their European creditors: Drop dead. In a national referendum, over 61 percent of Greek citizens voted against accepting the deep spending cuts, tax hikes and other reforms that European creditors are demanding in return for extending further bailout assistance to the deeply indebted nation. ... The overwhelming "no" vote pushed Greece closer to a potentially messy exit from the euro zone common currency union. It also set up possible global market chaos and presented a fresh headache for the White House, which has had little success pushing for a deal that would prevent a Greek exit.

Markets in Asia dropped on Monday and European stocks opened lower following the Greek vote. The euro also dropped while futures contracts suggested U.S. stocks could open sharply lower. But no immediate signs of panic emerged in overseas trading, something Wall Street analysts say reflects a belief that the European Central Bank could step in as soon as Monday to offer emergency support should Greek banks come close to failing. Greece has limited cash withdrawals and implemented other capital controls. But the nation's banks could still run out of cash this week.

CHINA STOCKS RISE ON GOVT ACTION – Perhaps an even bigger crisis looms in China, with the troubles in the Chinese equity markets; stocks rose on Monday after Beijing unleashed an unprecedented series of support measures over the weekend to stave off the prospect of a full-blown crash that was threatening to destabilize the world's second-biggest economy. ... In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company, which in turn would be aided by a direct line of liquidity from the central bank.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen was up 2.5 percent, while the Shanghai Composite Index .SSEC had gained 2.2 percent, pulling back after an initial burst of euphoria sent them up around 8 percent when trading began ... The rapid decline of China's previously booming stock market, which by the end of last week had fallen around 30 percent from a mid-June peak, had become a major headache for President Xi Jinping and China's top leaders, who were already struggling to avert a sharper economic slowdown.

THE NEW ECONOMY -- Buying a car could soon be a thing of the past, and Ford is desperate to find what's next: Ford last month sent letters to 14,000 of its American drivers with an unusual suggestion: For extra cash, they could rent their cars to fellow urbanites wanting a cheap ride. ... It would put Ford closer to the front of a movement in which cars are shared, ignored or Uber-ed - not bought.

BUSINESS BURST -- Wal-Mart ... plan ... should terrify Whole Foods, Kroger, and Trader Joe's: The retailer's smaller-format stores, called Neighborhood Markets, are a major threat to traditional supermarkets ... The Markets focus on three of Wal-Mart's strongest categories - groceries, pharmacies, and fuel - and they are more conveniently located to urban centers ... Supercenters are typically located on city outskirts.

Don’t mention this to the citizens of the City of La Verne, CA.

TRUMP TROUBLE - All jokes aside, the Republican Party is officially afraid of Donald Trump. He has virtually zero chance of winning the presidential nomination. But insiders worry that the loud-mouthed real estate mogul is more than just a minor comedic nuisance on cable news; they fret that he's a loose cannon whose rants about Mexicans and scorched-earth attacks on his rivals will damage the eventual nominee and hurt a party struggling to connect with women and minorities and desperate to win. 'Donald Trump is like watching a road-side accident,' said former George W. Bush press secretary Ari Fleischer. 'Everybody pulls over to see the mess. And Trump thinks that's entertainment. But running for president is serious. And the risk for the party is he tarnishes everybody.

POLL – Who will be the first woman on the $10 bill? Rink Rats did a survey: Eleanor Roosevelt 33% ... Susan B. Anthony 17% ... Helen Keller 12% ... Sojourner Truth 11% ... Abigail Adams 10% ... Nellie Tayloe Ross 5% ... Henrietta Lacks 4% ... Alice Paul 3% ... Jeanette Rankin 2% ... Carli Lloyd 1% … Wendy Lau 1% … Martha Rountree 1%.


Wimbledon:  Gentlemen’s Winner – Novak Djokovic, Ladie’s Winner – Petra Kvitova

Season to date (59-27)

MARKET WEEK – Investors expect the rest of 2015 to be a bumpy ride. The stock market has shifted to neutral lately while bonds have gone into reverse. The oil market came roaring back in the second quarter, but more pain may be in store for investors. Mom-and-pop investors are putting on the brakes after years spent piling into stock and bond mutual funds—reflecting anxiety that the rally in capital markets is growing long in the tooth. As mergers-and-acquisition activity has raced ahead in other parts of the globe, economic worries have kept Europe relatively quiet. And in China, action in Shanghai has been volatile, but a torrid start to the year means stocks are still up.

Greece's decision in Sunday's referendum to reject the terms of its creditors sent shockwaves across global financial markets Monday, as investors wonder whether Athens can achieve a debt deal to stay in the euro.

DRIVING THE WEEK - President Obama this afternoon receives on update on the fight against ISIS and will make a statement following the meeting … Greek creditors hold an emergency meeting on Tuesday … Senate Banking has a hearing Wednesday at 10:00 a.m. on "The Role of the Financial Stability Board in the U.S. Regulatory Framework” … FOMC on Wednesday at 2:00 p.m. releases minutes from its June meeting … The Managed Funds Assoc. and BPC on Thursday at 10:00 a.m. host a forum on the Dodd-Frank act at five … Senate Homeland Security and Governmental Affairs Committee on Thursday at 10:00 a.m. holds a hearing on "Understanding America's Long-Term Fiscal Picture" … Fed Chair Janet Yellen on Friday at 12:30 p.m. delivers a speech on the U.S. economic outlook to the City Club of Cleveland's Sally Gries Forum Honoring Women of Achievement … ISM Non-manufacturing Survey this morning at 10:00 a.m. expected to rise to 56.4 from 55.3 … Allen & Co. holds its annual media and technology conference in Sun Valley, Idaho … Comic-Con begins Wednesday in San Diego.

Next week: Summer BBQ, Air Conditioning and those who get it.

Until Next Monday, Adios.

Claremont, CA
July 6, 2015

CARTOON OF THE WEEK – Tom Toro: congratulates U.S.A. Women’s Soccer

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