The Bull, Bear & Lion
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THE BULL, BEAR & LION VOL. IV, NO. i THE STUDENT NEWSPAPER OF THE COLLEGE OF NEW JERSEY’S SCHOOL OF BUSINESS AUGUST 2017 JAPAN STAGNATES DESPITE “A BENOMICS” ISLAND ECONOMY SEES LITTLE REVITALIZATION IN PRESIDENT SHINZO ABE’S TRIPARTITE PLAN; RECRUITING YOUTH MAY HOLD KEY TO PROGRESS By Paul Mulholland take place. Japan is by far the oldest de- with other countries, but the failure of Japan is one of the most stagnated veloped country in the world. Its work- the Trans-Pacific Partnership (a 12- economies on the planet. Japan’s econo- force has declined by 6% over the last member trade pact among Pacific Rim my grew by 1% last year and the IMF ten years and the number of 20-29 year- states) was a disaster. Japan exposed its projects it won’t grow by much more olds has fallen from 18.3 million to 12.8 negotiating position on key issues, and this year. Its GDP has hardly risen since million since 2000. It is not hard to see frustrated politically sensitive industries the 1990s, and its aging population why a declining domestic population such as agriculture and auto parts in a peaked in 2010 at 128 million and is in would hurt growth, but instead of al- final deal that was ultimately abandoned decline. The Prime Minister, Shinzo lowing more immigration into Japan by the U.S. Abe, was elected in 2012 on the promise from other Asian countries with work- Japan and the EU reached a consen- to restore growth and fight deflation in ers to spare, Japan has focused on in- sus on a deal dubbed JEEPA (Japan-EU the economy in his three-part plan creasing its own birth rate, now at 1.46, Economic Partnership Agreement), dubbed “Abenomics”. even creating a new cabinet position for which has been described as an ex- The first “arrow” of Abenomics is fertility. Probably the most effective change of Japanese cars for European fiscal stimulus. Abe’s government has reform Japan could make would be to wine and cheese. But if Japan is to com- Probably the most effective re- spent over $200B since 2012 on infra- allow younger workers to enter its pensate for a decreasing workforce it form Japan could make would structure investment with the aim to workforce from labor surplus countries should focus on what it does well (cars) increase growth. Even though Japan’s in Asia. and leave other industries to other na- be to allow younger workers to unemployment rate is below 3%, a 25- Another potential major reform tions (cheese). enter its workforce from labor year low, the extra spending has not led could be relaxing Japan’s rigid labor Japan has also been struggling with surplus countries in Asia. to higher wages or growth, only to an laws which make it difficult for firms to low inflation and deflation since the increase in Japan’s debt, which now lay off workers, effectively locking out 1990s. Deflation puts additional pressure stands at around 240% of GDP, the young workers from full-time jobs. This on borrowers because the repaid money highest in the developed world. lack of secure employment is ironically is more valuable than the money that The second arrow is monetary policy. denied to younger workers by these was lent to them, and deters investment The Bank of Japan has introduced nega- laws because firms are less likely to hire because assets are expected to be cheap- tive interest rates and has launched a them full-time if they know they cannot er in the future. The resulting decrease quantitative easing program (in which easily fire them. Economic insecurity in consumption and investment leads to assets are bought with printed money to among the young likely contributes to still further deflation and decreases intentionally devalue its currency). The Japan’s deflation and demographic traps growth. Bank of Japan now owns assets valued by preventing the young from investing For Japan to break out of its trap, it over 70% of Japan’s GDP, roughly triple in themselves and starting families. should continue monetary stimulus to proportionate to the US Fed’s quantita- With a declining workforce, Japan “reflate” the Yen, and most importantly tive easing program. can also try to increase labor efficiency, open up its economy — and particularly But if the first two arrows have been which requires lowering Japan’s tariffs its labor market — to competition from ineffective, it is because the third arrow and opening its economy to competi- the outside and to its own young work- of structural reform has yet to seriously tion. Shinzo Abe has pursued trade deals force. U.S. & world headlines: Index to writers August 2017 Featured in this edition: ♦ 8/25: Hurricane Harvey hits Houston ♦ Paul Mulholland, ‘18 ……. A1 ♦ 8/26: Mayweather defeats McGregor with 10th-Round Political Science major; Economics, Philosophy, History minors TKO ♦ Insights: economic policy, world governance, state legislation ♦ 8/28: Former Expedia head Dara Khosrowshahi Hailed as new Uber CEO ♦ ♦ 8/25: Spotify paves way for IPO with Time Warner Kaelyn DiGiamarino, ‘18 ……. B1, B2 label deal ♦ Marketing major, International Business minor ♦ 8/24: Yellen, Draghi, world economic leaders meet in Insights: consumer behavior, branding, management literature Jackson Hole, Wyoming ♦ ♦ 8/17: Van drives through Barcelona crowd in deadly Joshua Allman, ‘18 …….. B1 terror strike ♦ Music with Cello specialization, Finance major ♦ 8/19: North Korea reveals advances in Insights: economic markets, sports management, financial transactions Intercontinental Ballistic Missile weaponry ♦ ♦ 8/4: German Chancellor Merkel campaigns for reelec- Sean Lange, ‘19 ……. A2, B2 tion against Social Democrat Schulz ♦ ♦ 8/16: President Trump disbands Manufacturing Linguistics, Interdisciplinary Business major Insights: stock news, M&A, executive backgrounds Council and Strategy & Policy Forum ♦ Welcome back, TCNJ! Sharpen your knowledge on Japanese demographics, keep up with world headlines, & be- come acquainted with the interests of our student staff — just on this first page alone! En- joy the expanded content in the August 2017 edition of The Bull, Bear & Lion: our first four-page issue. Thanks for picking us up! Contact us: [email protected] Bloomberg Businessweek 2016 Ranks TCNJ School of Business #1 in NJ, #35 in Nation, Undergraduate Business School Programs www.bbltcnj.weebly.com PAGE A2 | THE BULL, BEAR & LION | VOL. IV, NO. i AUGUST 2017 CORPORATE & FINANCE LEARN YOUR M&A ABCs GOOGLE PARENT ALPHABET IS A JUGGERNAUT FOR TAKING OVER TECH VERNTURES By Sean Lange A coinciding trend? The same firms have been net search, but also the leading magnet for ac- Among the most powerful trends in Ameri- extraordinarily named. Silicon Valley startups quiring these Silicon Valley ventures. Therefore, can enterprise in this millennium has been the have made a fashion of using the most niche let- when company executives felt the need to create starting-up of small technology firms. Following ters of the Roman alphabet when titling a parent company to separate Google from its their inceptions, these companies have themselves. Technology IPOs in 2017 have in- many startup siblings, it was only appropriate Accomplished some extraordinary feats: pro- cluded Alteryx, Impinj, Okta, Qualtrics, Viptela, that they named the holding firm Alphabet. gramming artificial intellects, 3D-printing pros- Yext, and Zuora. Here, learn your ABCs of Alphabet’s existing thetic limbs, and engineering driverless vehicles. Google is a brand universally linked to inter- and up-and-coming holdings. Android: developer of the most prevalent operating software in the world; provides the mobile interface on over 2 billion phones Meka Robotics: pioneer of bipedal robots that mimic and tablets human sprinting Bump Technologies: creator of the Bump! app that allowed users to exchange data by tapping their smartphones together; captured the Nest: Alphabet’s “smart home” subsidiary that earliest whims of mobile information sharing designs internet-connected, self-programmable appliances, before being acquired — and having its iPhone- including thermostats, smoke detectors, and security cameras clanging premise sensibly retired — during the 2013 remodeling of Google Photos Oyster: the digital publishing company that perfected e-book streaming for all devices built with Android software Calico: Alphabet’s $1.6 billion biology subsidiary devoted to human longevity research PostRank: founder of the analytics services used by Google to accumulate web click, page view, and network traffic data from blogs and Deepmind: the machine learning venture famous for its social media sites algorithmic mastery of the board game Go Quickoffice: builder of the productivity applications that were the Eyefluence: a lab that classifies foveal shifts, the precursors to Google Drive, Docs, Sheets, and Slides specific optic movements that enable Google Glass headset wearers to navigate web pages with their eyes ReCAPTCHA: maker of the infamous internet security system, which asks users to type sequences of distorted letters and numbers; sold its 100- FameBit: a digital marketing intermediary million-Captcha-per-day business to Google in 2014 that strikes contracts between independent con- tent creators and online companies, acquired in Songza: service that provides music recommendations 2016 to drive YouTube ad sales based on the user’s favorite genres and artists, the time of day, and the season of the year Google: Alphabet’s flagship subsidiary that includes the eponymous search engine, Cloud database, Maps Titan Aerospace: developer of unmanned aviation vehicles; contrib- navigation, and