Livine: Opel won't be sold to Magna

I’ve chosen for an article about Opel Antwerp in the newspaper ‘Nieuwsblad’.

On 3 November 2009, there was an agreement with the employees of Opel concerning the cut down of the expenses. There must be 265 million euro turned in until 2014 with all the European establishments together. In chance therefore, the employees will get 10% of the shares of ‘New Opel’.

This agreement is very important for the take-over from Magna. This cut down of expenses will only take place when there is effectively a take-over. They are already waiting for the signature for weeks but the European Commission is still doing difficult.

Today, 4 November 2009, General Motors has decided that they won’t sell Opel to Magna. In September, they decided to sell 55% of Opel to the Canadian Magna and his Russian partner Sberbank.

The Flemish minister Kris Peeters and the trade unions are very surprised of this decision. Kris Peeters wants clarity concerning the consequences for the Antwerp establishment. General Motors had a restructure plan but this was not good for Antwerp, now, there is a new plan but the question is what is the position for Antwerp in this restructure plan.

The Prime-Minister wants to come together with the workgroup with the trade unions and some experts. He also want to make contact with the other countries who have Opel-establishments.
The Flemish government was prepared to invest 500 million euro in Opel Antwerp, this offer stays according to Mister Kris Peeters. If Opel Antwerp gets a durable future, they will discuss this offer.

They are still hoping for a positive answer. There work about 2600 people in the Antwerp Opel-factory.

I also hope that Opel Antwerp can stay open because otherwise, there will be a lot of people fired. So I think that selling Opel to Magna for 55% is the best option. The other 45% should be financed of the Flemish government and other possible investors so that the employees can keep their jobs. I also think that, if Opel Antwerp must close, this will be very bad for us because Opel will be harder to get and become more expensive because of the in- and export of cars and exclusive components.

You can read the articles on:

· http://www.nieuwsblad.be/article/detail.aspx?articleid=DMF20091103_035
· http://www.nieuwsblad.be/article/detail.aspx?articleid=DMF20091104_002
· http://www.nieuwsblad.be/article/detail.aspx?articleid=DMF20091104_001
· http://www.nieuwsblad.be/article/detail.aspx?articleid=DMF20091104_006

Greet!
Livine

Annelies: Bail's out hidden cost

Bail's out hidden cost

Summary

The Amarican government has put in $700 billion in the American banks, to rescue them.

In a recent report, Neil Barofsky write that the bailout for the banks has several hidden costs.

There is on the one hand the real cost of the money to rescue the banks and some other companies. On the other hand there are less material costs such as, the danger that companies who took great risks are rewarded by the government. Consequently the government will lose credibility with taxpayers.

Cost of enormous debt.
The government has borrowed money by issuing debt in the form of Treasury bonds. It's unclear exactly how much the government had to borrow to pay to rescue the banks. But according to Barofsky's report, the government paid for 46% of its expenditures in 2009 by issuing new debt, compared with the 10-year average of 9%.

Cost of indulging bad behavior

There is also a hidden cost in the form of promoting bad behavior. Companies and especially banks were making irresponsible bets. The government responded by giving them a lot of money. The report says to stop that kind of behavior of the banks we will need more regulation on the financial markets.

Cost of political distrust

Barofsky said that the government doesn’t give transparent information about the bailout. So the taxpayers will not trust the government anymore when it will take new measures in the economic crisis.
"The loss of confidence in the government could be one tuffest costs of this program, " said Barofsky

My opinion

In my opinion it’s a good thing that the American government is willing to save the banks. Although I think that the banks had to be better creditworthy in the first place. Then they wouldn’t need the money from the government.
Now, they receive a “reward” while they failed.

We, the consumers, don’t have a reward and we are even in the middle of a financial crises because of the banks who have failed. We, the consumers, who don’t have a lot of money and we don’t have a reward, we have to save our self in the financial crises. In my opinion that’s just not fair.

In my opinion, the banks didn’t deserve the “reward” they were given by the government.

Source: http://money.cnn.com/2009/10/21/news/economy/sigtarp_bailout_report/index.htm?postversion=2009102103

Greet Annelies

Evelien: ‘Obama elated with grow US-economy’

After a year of recession, the American economy is now back on track with a Gross Domestic Product of 3,5%.

Thanks to an increasing consumption, a bigger export and the construction industry the Americans can speak of a revival of their economy. During the third quarter of 2009, the American economy grew with 3,5%, the largest three month gain they have seen in two years.

President Obama stressed that his country has come a long way since the first three months of 2009, when the American economy shrunk with an alarming 6,4%. The progressive president sees the growth as an affirmative that the taken measures have the right impact.

Obama says that it is now up to the American citizens to put the growth into jobs.

I’ve chosen this topic because at my opinion, corporate finance also includes the finance of a country. In this case, president Obama runs America like a CEO runs its business.

As the credit crunch started in America, it’s a positive sign towards the rest of the world that for the first time in a year, there are some optimistic figures on account of America.

This shows that the economy is repairing itself carefully. The economic recovery will probably not go as fast as the recession, but I’m sure that everything will be fine within some time. If we continue to invest in our economy and keep consuming, the worldwide economy will recover much faster than expected.


By Evelien Van Gaeveren

Source: the news ‘Het journaal’ from 29/10/2009

Lien: 'WorldCom - What went wrong'

In my blog this week, I want to continue a bit on a path some of us started last week. Corporate finance isn’t always about honest routines and legal practises. Corporate finance is often about scamming people and making as much profit as possible, neglecting the fact whether it’s honest or dishonest. I’m referring to the blog Evelien wrote last week about the ‘Enron – scandal’, or to my blog about the ‘shelf – corporations’. Well, this week’s blog proves that also the very largest among companies are able to keep their fraud a secret, while they are getting rich.

This week, I watched a little movie on ‘YouTube’ about the fraud – scandal of WorldCom, one of the largest telecommunication companies of all times. The maker of the movie presents the story in a bit of an ironic way, to make people realise that this is not the way to get to the top, or at least not how you can stay there.

WorldCom’s former CEO, Bernie Ebbers, managed to set up one the biggest corporate securities fraud scandals of all times. He presented the company as much healthier than it actually was to fool the investors. How did he do this? Well, normally, a company has a balance sheet and an income statement. Expenses have to written on the income statement. Instead, Bernie Ebbers capitalised them. This means he wrote them on the balance sheet in the form of ‘prepaid capacities’, as if these expenses would be an asset, which would then get depreciated. Because they weren’t booked as expenses, this didn’t decrease the gross income and the company looked a lot wealthier.

An expert on the matter says that these transactions are actually very amateurish and really not very hard to detect, but Ebbers got some help... He got the assistance of the company’s auditor, Arthur Anderson. Anderson signed of all the papers, saying they were correct, but there was no way he could have missed the fact that many things were out of order. The man was in on the whole fraud from the beginning.

In 2005, when the scam was reviled, the value of the company was reduced to nothing and many people lost their job, their pension plan, etc. Bernie Ebbers on the other side was sentenced to 25 years of prison.

Despite of the fact that fraud isn’t funny at all and that many families have become the real victim, because mom or dad lost their job when the company was exposed, the sarcasm of the movie is quite humorous, because it shows that people can be very, very stupid when it comes to money. They scam other people, in the hope to reach the top overnight, but all they eventually end up with is a cell of two by two and a lot of angry former employees.
I don’t understand how money can turn people in such irrational human beings. Getting rich doesn’t come overnight, that’s just how it is, but to scam so many people, to me, is not the way to get there.
The strangest thing about it, is that CEO’s, accountants, ... who get involved in these cases, mostly really believe they will get away with it. These kinds of practises are done all around the world, despite of the many examples of how it turned out very bad. I truly believe this will never change. People will always want to become very rich, very fast and if they can’t do it the nice way, there’s always this way.

Bye!

Lien Vanneder

Source: http://www.youtube.com/watch?v=7g_d-phoUrU