Month: April 2007

Posted on

UN Sanctions on Iran and the Possible Effects on the Global Oil Market

The United Nations Security Council voted unanimously at the end of March to impose new sanctions on Iran in order to persuade Tehran to abandon its plans to enrich uranium.  [1] There have been mixed reactions to the move, with some saying that sanctions will effectively isolate the rogue Iranian regime and it’s President, Mahmoud Ahmadinejad, who has been a thorn in the side of the United States and the Bush administration as it has tried to achieve its policy objectives in the Middle East.  Others, however, have called the latest sanctions a weak attempt with little chance of success in regards to actually bringing about the end of Iran’s nuclear ambitions. 

The reasoning behind this criticism is that the new U.N. resolution, which most notably places a ban on arms trade with Iran and freezes some the country’s overseas bank accounts, does not touch the oil trade, which is

… Read the rest
Posted on

Problems With Interest Only Mortgages

 I.  Introduction:

In
the microwave generation, everybody wants things right away. Things
that our elders used to dream of having and save up for are now
available instantly using credit. Credit cards give buyers the option
of purchasing more than they can presently afford and paying back only
interest. But while it may sound like a good idea to have everything
now, for most living at the edge of their means, credit gets out of
control and they get stuck in bankruptcy. A buyer overextending himself
using a credit card is chaos on a small scale compared to the abuses of
credit going on now.

In
recent years, banks have been marketing interest-only mortgages to a
crowd of buyers that want bigger houses, but couldn't otherwise afford
it. Interest-only mortgages allow home buyers to pay a monthly payment
that consists of only interest, no principal. [1] The option to pay

… Read the rest
Posted on

Telecommunications Entrepreneur Concocts Grand Scam: Off-Shore Accounts, Smart Business Planning or Underhanded Tax Evasion?

Introduction:

There is
no way to get around paying taxes. This was a fact Walter Anderson
learned the hard way. While directors may owe fiduciary duties to their
shareholders in terms of wealth maximization, this cannot be
accomplished through illegal means. Shareholders expect their directors
and officers to legitimately run the business and to employ their
acquired business knowledge in order to promote shareholder wealth.
Anderson interpreted such Delaware law to allow him full access to
evade payment of personal income taxes by storing his acquired assets
in off-shore bank accounts, away from the reach of the Internal Revenue
Service.[1] Such actions were not considered sound business judgment
and Anderson has been indicted for engaging in a tax evasion scheme,
obstructing the IRS, and defrauding the District of Columbia government
by failing to pay over $200 million in taxes.[2]

“Most
people obey the tax laws: they report their income to

… Read the rest
Posted on

Subprime Slump: Will the Economy Follow?

On February 7, 2007, the Senate Banking Committee heard testimony
which indicated that nearly 20 percent of subprime mortgage loans
obtained in the period from 2005-2006 will result in foreclosure,
affecting over 2.2 million families in the United States over the next
few years. [1]  On Monday, April 2, 2007, the second largest provider
of high-risk, subprime mortgages, New Century Capital Corporation of
Irvine, California, filed for Chapter 11 Bankruptcy protection and
fired 3200 employees in the wake of its own "financial missteps" and
trouble with the SEC and U.S. Department of Justice over financial
statements which failed to accurately account for financial losses the
corporation was suffering, as well as mismanagement of the
corporation.  [2]  With more than 25 subprime lending companies
shutting down over the past few months [3], many are wondering about
the implications for the future of both the subprime market and the
economy.

Subprime mortgages… Read the rest

Posted on

Why We Should Care About “Meandering Giants”

Healthcare mergers are topping headlines as what the Economist calls “meandering giants.”[1]  Most recently, CVS Corp. acquired Caremark Rx Inc. in a $26 billion acquisition agreement.[2]  Some wonder whether these mergers will lead to a “meandering giant syndrome,” where companies that grow too much may “stifle innovative culture that smaller companies tend to have,” leading to loss of corporate identity and employee enthusiasm.[3]  In other words, the Economist seems to be questioning whether the merger of major companies in the healthcare industry has a contemplated direction, or whether the pharmaceutical giants are “meandering” towards a possible corporate detriment.  As a proposed answer to the Economist’s question, I suggest that the pharmaceutical giants are lining up as merged entities to take advantage of the economies of scale, rather than meandering aimlessly. 

The Economist points to a number of factors underlying the merger of pharmaceutical giants.  The research costs of new

… Read the rest