The CEO Game

• 09Dec

  Focus on Brazil: Only Second to the US

  Economy What is Your Opinion?

  After the kick off article Focus on Brazil, we continue to cover the story behind Brazil’s economic boom. This time we focus on the roots of this financial revolution; Brazil’s financial carnival began in the middle 90’s when the inflation was lowered, foreign exchange and investments became available and many government institutions were privatized. Since then the financial boom gave its toll and over the years many Brazilian companies became giant worldwide corporations, such as the national oil company Petrobras, the mining company Vale or Embraer- one of the biggest private jets producer in the entire world. So, what’s the story behind the now so obvious Brazilian popularity and success? Where did it all start?
  

  

  Coffee beans' high price helped Brazil

  While the whole world is suffering from a decrease in foreign investments because of the financial crisis, the same kind of investments in Brazil grow by 30%. This is only one of the reasons why Brazil is the leading and biggest economy in South America and only second to the US in the entire American Continent. “There is consent between South American countries about Brazil: They all agree it is the leading country” according to experts. “If once Brazil, Argentina and Mexico disagreed about who is leading the flock, it’s now clear to both the latter that Brazil is the one”, they continue.

  The success of this South American country also relies on luck and a lot of it. Brazil, the number one exporter of sugar canes and coffee beans in the world and a big exporter of cacao, tobacco and soy beans as well, has really enjoyed the continuing price rises of these commodities in the global markets in the last few years. Most of the wealth in Brazil, like other surrounding countries, is owned by a small part of society, while most of the citizens are living in poverty. According to the Gini inequality index, Brazil is located at the 10th place out of 126 countries, but it is a good improvement- in 1989 Brazil was ranked second.

  These cracks in the Brazilian society are right there on the surface for everyone to see. Take Sao Paulo for instance, out of the city’s 10 million residents, 30 thousand are millionaires. It is hard to miss all the choppers which are swirling between the city’s skyscrapers, which nearly all of them have a landing spot. The millionaires simply prefer to skip the unbearable traffic jams by traveling by air and it shows: Sao Paolo is the leading city in the world in terms of private helicopters, surpassing New York and Tokyo. On the contrary, residents of the poorer neighborhoods can’t even pay a taxi ride.

  Nevertheless, in the last few years the social gap is narrowing gradually. As mentioned in the previous article, the middle class has grown and then some. With more than 20 million Brazilians who joined it lately, it is a big impact. Still, millions of others remained poor but have managed to improve their financial status to some extent. The Global Bank also reported that between 2002-2006 the social deficits have narrowed by 6%. The man in charge is no other than Brazilian President, Luiz Inacio Lula da Silva, also known as “Lula”.

  Born in the north, the Brazilian president had a poor childhood and had to work since the age of 14. He was elected as a candidate of the Brazilian labor party, while promising profound reforms. Because of political arguments and compromises he didn’t fulfill his promise to the end, but he did make a mark. The most significant step was a massive investment through loans by the government, in the citizens themselves.

  Following the government, the private market also increased its credit eligibility. Ten years ago, only few Brazilians had a credit card, even fewer had a mortgage. Today, more and more Brazilians use and enjoy both. This in turn has helped the Brazilian market: millions of citizens became potential consumers of different merchandise, which in turn influenced investors to come flooding in.

  Omer Shachnai

  The CEO Game.

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  Tags: Brazil, Brazil's economy, financial blessing, Financial Crisis, Global, Global Economy, South America

• 08Dec

  Focus On Brazil

  Economy 4 Comments

  Brazil’s economy is on the up and growing rapidly as the swift pace of the samba, the national icon: the investments are flowing in, the investors are enthusiastic, the market is getting stronger and the gap between rich and poor is closing gradually. The CEO Game launches a special series of articles about Brazil, one of the hottest countries in South America and a rising powerhouse in the global scene, in order to shed some light on this Latin wonder and answer why all investors are going crazy for Brazil?

  

  The ninth economy in the world

  In Brazil, the land of the samba, even rallies appear like a carnival: balloons in all sorts of colors are flown into the air, bands are playing to the beat of the drums and the protesters are making themselves heard through singing altogether. That’s just how the 50 thousand workers of the major banks of Brazil, looked like when they assembled to protest three weeks ago in front of the parliament in Brasilia, the capital. They requested to minimize the working week to 40 hours of work and to improve the labor conditions.

  “Our economy is growing in the recent years, partially due to the oil, which is a national resource that belong to all the Brazilian people. It is not understandable why all the profit is going only to the investors and the rich. The workers, the ones who are behind the wheel, who put the wheels of the economy in motion, also are entitled to some of the wealth”, that’s the reason for the protest according to one of the protesters. This rally, which might seem trivial to the Western “eye”, says something about the new club that the Brazilian worker is gradually joining.

  That worker, is no longer demanding work by itself, he wants privileges too. It is another symptom for the change that Brazil is undergoing in the last few years- millions of people who have gone from the poor layer of society to the middle class and are changing the face of the country. You can notice the change everywhere, from Sao Paulo, the largest city in Brazil and financial capital of it to Rio de Janeiro (the host of the 2016 Olympic Games), where each weekend thousands of Brazilians are swarming to Copa Cabana, the most prime and well known beach location in the city.

  In the last few months, Brazil became the hottest name in the global economy. Approximately two weeks ago, the “Economist” magazine published that in five years, Brazil’s economy will become the fifth largest economy in the world, while surpassing France and the UK. This optimistic estimation lit a fire under this already hot potato and increased the buzz surrounding the country through the global markets.

  Brazil is currently the ninth economy in the world in size and is one of the four countries who are lucky enough to be a part of “BRIC”, a term that refers to the fast-growing developing economies of Brazil, Russia, India, and China which are meant to be the fastest growing economies of 21st century. The acronym was first coined and prominently used by Goldman Sachs in 2001. In the twenty-one century, these four countries will consist 40% of the world population, while only 12% of the world population will live in the Western countries.

  Brazil’s ace and uniqueness in this pack is its democracy which treats foreign investors gracefully and in dignity. Moreover, hosting the 2014 Mondial games and the 2016 Olympics and the 20$ billion that the government is expected to spend on these ventures will definitely and significantly increase the financial boom and is surely another reason for foreign investors to come a knockin’.

  Omer Shachnai

  The CEO Game.

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  Tags: Brazil, Brazil's economy, BRIC, Global Economy, Oil Prices, Olympics

• 07Dec

  Geithner Blasts Bonuses

  Economy What is Your Opinion?

  In an interview on “Political Capital with Al Hunt” earlier this week, US Treasury Secretary Timothy Geithner criticized both the huge bank bonuses continue to be doled out, even following billion-dollar government bailouts, and dismissed the Goldman Sachs’ claim that the company would have weathered the financial crisis without government help. So continues the public and the politician’s horror at the audacity and arrogance of the banks.

  

  "Classic Bank Run"

  Many analysts agree that one component that lead to the financial crisis was the huge bonuses that were given out on Wall Street. These absurd bonuses reward the sort of risk-taking that led banks into the sub-prime mortgage fiasco. These bonuses also enrage Americans on a moral level. How could it be that those people who so recklessly led the country into recession are now the ones who are receiving huge sums of money while many Americans are, as a result of their behavior, unemployed? And furthermore, how can these companies take money from the very taxpayers who are now suffering only to use it to lavish bonuses on their execs? Something is amiss.

  And Geithner agrees. “We want to see fundamental constraints on how senior executives are paid at these institutions,” he said in the interview. The question is, of course, if the banks care what he says. Research done by Johnson Associates in November found that bonuses in 2009 would be up 40% from 2008, which was the low point of the financial crisis. In 2008, almost $20 billion in cash awards and billions in stock and other perks were given to Wall Street employees. People who trade bonds, commodities, and currencies might even see their bonuses back at their pre-crisis levels.

  Perhaps in an attempt to reign in this supreme arrogance shown by the banks, Geithner also criticized the golden boy of Wall Street, Goldman Sachs. Lloyd Blankfein, CEO of Goldman, claimed recently that the company would have survived the crisis even without the 10 billion dollars it took from the federal government. In the interview, Geithner said that during the crisis all banks in the US were experiencing a “classic bank run” and “none of them would have survived a situation in which we had let that fire try to burn itself out.”

  Tamar.

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  Tags: Bank system, Financial Crisis, Tax payers, Timothy Geithner, Wall Street

• 05Dec

  What Was The Financial Story of the Decade?

  Economy What is Your Opinion?

  Just two years prior to this decade’s end, the world was struck by the one of the biggest financial crises since 1929. But despite the moments of crisis and before our entrance to the second decade of the 21st century, we had witnessed many moment of success and technological invents that conquered the world. Now it is the time to go back and review the most influential financial events of the first decade in the millennium.

  

  Euro- became the financial star of Europe

  The aforementioned financial crisis will be our kick off point. The global financial crisis was the most significant event influence- wise. When the share folders began to lose their value in 2007, no one could have though that it was just the warning sign. But, when the American banks came tumbling down one after one in the United States, everybody already knew, that this was the beginning of global economic crisis. In 14 September 2008, the crisis had gone from bad to worse, when Lehman Brothers, the American investments bank declared bankruptcy. From this point and on, it was one event after the other, indices dropped percents by the hundreds and many people were left homeless. From the beginning of this year, we started to see many signs of recovery in the economy, President Obama’s people even found the time to claim it was over, but experts still insist this is not the end.

  The golden age of the European Union: In 2002, Europe adopted the new Euro currency. The Euro is the common currency for sixteen out of twenty-seven countries who are members of the European Union. The newly born coin, replaced all the currencies which were used until then in those different countries. Just before the introduction of the Euro, the continent was swept by fears and sincere concerns, mainly due to the fact that not all of the countries were ready to receive the new currency. Nevertheless, hysteria became history, today- nearly 8 years after its introduction the Euro became the financial star of Europe.

  Another major event, which was one of the crisis’s first sprouts was the oil barrel price which reached the price of 100$ for the first time in 24 years. At the time, experts connected the rise to another decline in the US oil reserves, the price reached its climax in July 2008, but since the financial crisis was officially declared, the prices dropped to the low price of 33$, the lowest price since July 2004. But enough with these “misfortunate” events, in the year 2000 the widely renowned “Disk On Key” was invented by an Israeli company named “EM-Systems” which was later bought by Sandisk for 1.5$ billion. The easy to use, Disk On-Key became one of the most popular accessories in the world. Later on in 2001, Microsoft released the operation system Windows XP, which had two different versions one for home use and one for the business sector both based on the same core, not that I am a huge fan, but it is worth mentioning.

  YouTube’s huge deal: In February 2005, three workers of pay-pal, the online credit service, founded the world’s largest and biggest file sharing website, YouTube. In November that year, a sponsor was found and the site was born. Under-less than a year YouTube was bought by Google in one of the biggest deals in the field, when Google paid 1.65$ billion in shares for YouTube. It became so big that we can’t even imagine the web today without YouTube or other familiar sites.

  The world’s second longest Oil pipeline which was built in 2006 is the first pipeline which is capable to deliver oil from Asia to Europe, not through Russia. The pipeline stretches over 1,770 kilometers and goes through the capital of Azerbaijan and Georgia, until it reaches Turkey. Oil this, Oil that, we personally take much more interest in the iPhone. In 2007, Apple announced on their new joy toy, the iPhone. The advanced device was one of the most sophisticated yet appealing devices which were invented this decade. It revolutionized the cellular market, and made the iTunes store and the App Store well famous. The iPhone is controlled by touch, and is considered one the biggest innovations in the field of private communication.

  Britain’s big break came in the form of a nerdy boy who is a great magician. The science fiction book series of Harry Potter from J.K. Rolling became a huge success story. Million of books were sold all across the world, and with each release the sell record of the previous book was broken once again. Only in the US, the seventh and last book in the series, sold 8.3 million copies in the first 24 hours of its release alone. Microsoft’s Second Event came in 2007 when Microsoft released Windows Vista. A lot of good stuff was told about the operating system before the release, but soon it was clear that the joy was a bit too early. A little after the publication, the company declared on decreasing the price, but it didn’t make a lot of change. Today, the new Windows 7 seems to bring a fresher look and feel to Vista and could be a sign of success after that failure.

  The End of the Beetles: In 2003 came the end of an era- the creation of the classical Beetle car was stopped, after 65 years of production. The car from the house of Volkswagen, was created first in 1938, misfortunately due to the request of Adolf Hitler. Over the years, twenty million cars were made, until 30 July 2003 when the curtain was finally closed on one the milestones in the history of the automobile industry. Another means of transportation which made history, and now became a part of history on its own is the Concord Plane. The plane came out of service in 24 October 2003 with a final retirement flight that year and while we are on the subject, let us mention the First Private Flight to Space: In 21 June 2004, Space Ship 1 had complete the first private trip to space with the experienced pilot Mike Melvill on board.

  In conclusion it was a great decade in spite of the financial crisis, a decade which was full of wonderful inventions- many of whom we mentioned here, and still we barely scratched the surface.
  Omer Shachnai

  The CEO Game.

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  Tags: Disk-On-key, Euro, Financial Crisis, Google, Microsoft, Oil Prices, Youtube

• 04Dec

  Monopoly – More Than Just a Game

  Economy, The CEO Game What is Your Opinion?

  This article defines and discusses the meaning of monopoly and tries to explain how one company can control all of the market. It will then discuss whether a monopoly is good or bad and for who?

  So, what the hell is a monopoly? Well monopoly is a generic name for a company or individual that controls most or all of the supply of a product or services. This means that it can control the price of a product, and if a company can control the price of the product then it can easily maximize its revenue. In other words, the monopoly takes advantage of its special ability of setting the price and by doing so the customers and other small competitors are hurt by this.

  

  More Than Just a Game

  So how can a company reach the status of monopoly? Well, some companies can guard their product or service through things such as a patents or trademarks. These are very reliable tools to guard a unique product. If you have a product with a patent you automatically become a monopoly because you are the only one that can sell or manufacture it, but it’s very hard to create a product that have sufficient demand in the market and yet has a unique quality such as innovation in its manufacturing process or in the makeup of the product itself. A company can also get big enough and become a leading force in the market. It can also be that the market is too small and the first company takes over all the market. Sometimes a company can be so good in the manufacturing process or have such a uniquely professional work force that it can eliminate competition, but that’s highly unlikely. In some rare cases a country can give a company monopoly rights.

  Sometimes giving patent rights can do much harm to the public and even raise ethical questions. For example, every year the pharmaceuticals industry invents lots of new medicine under patents and that’s way those companies sell them in such high prices. This medicine can be a life-saving yet the poor can’t get it because it is too expensive. But if the product didn’t have the protection of a patent and instead was a commodity in the free market, many more lives would be saved.

  In conclusion, a monopoly is bad for consumers and very good for the monopoly. Sometimes monopoly status can lead to unfair consequences. In one side of the market economy there is perfect competition, which means that the consumers enjoy the lowest prices possible. On the other hand, there is the monopoly, which means that the one company sets the price and gains maximum revenue at the expense of the costumers.

  While playing the CEO game, you will get a unique chance to compete against leading monopolies and even trying your own monopoly.

  Omri.

  The CEO Game.

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  Tags: Economy, Free Market, Monopoly, The CEO Game

• 01Dec

  Dubai Debt Crisis

  Economy What is Your Opinion?

  As we receive more and more news updates about Dubai’s debt crisis, we have to wonder is the financial crisis truly over? Or were the last few months just a short break between the stock exchange falls. To better understand the affect that Dubai will have on the financial world I attached an interview Max Keiser.

  We hope that in the future using online business simulations such as The CEO Game will help to predict more accurately financial crisis’s like the one were having this year.

  Ailon.

  The CEO Game.

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  Tags: Debt Crisis, Dubai, Financial Crisis, Max Keiser, The CEO Game

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