As result of recession, Gen Y is adopting frugality seen in Great Depression. Will Gen Y focus less on extravagances and more on success? Pairing of entrepreneurial spirit and frugality could lead to long-term success.
While many decisions made over a number of decades created the circumstances that led to the worst recession since the Great Depression, certain government actions were particularly devastating to the US and world economies. Embodied in the Gramm-Leach-Bliley Act (also known as the Financial Services Modernization Act of 1999), the law made two important changes to the securities regulations enacted in response to the Great Depression.
A new study featured on the front page of yesterday’s New York Times attempts to quantify unemployment’s impact on jobless individuals. As one of those unlucky individuals (though I was not part of the study), I can’t say that many of the study’s finding surprised me. But, for those who still have jobs, it’s an interesting look at what the 15.4 million unemployed Americans are enduring.
The tables below summarizes the study’s findings, which polled 1,650 adults, 708 of whom were unemployed at the time.
The results are organized into seven categories:
- Financial impact
- Emotional impact
- Children and household
- Job market going forward
- Job search
- Concerns of the unemployed
- Outlook on economy/stimulus
As President Obama prepares to announce his plan for the War in Afghanistan and measures to stabilize the economy increase the federal budget deficit to historic levels, perhaps it is time to rethink our nation’s fight against marijuana. With numerous states having passed medical marijuana statutes and the federal government opting not to prosecute those individuals operating within the strictures of such laws, the so-called “War on Drugs” seems to be a money-losing and ill-fated proposition where cannabis is concerned.
According to a study by international consultancy Kroll, while overall occurrences of fraud affecting businesses have not increased since the global recession began, the industries impacted have changed. Eighty-five percent of companies surveyed reported financial losses due to fraud, averaging a loss of $8.8 million. The losses, however, have shifted between industries disparately impacted by the recession, as the following table shows.
According to the latest PricewaterhouseCoopers/National Venture Capital Association MoneyTree report, venture capital (VC) investments in the first half of 2009 are 55% lower than the same period in 2008, falling from $15.2 billion to $6.8 billion. To be sure, $6.8 billion is still a substantial sum of money, but the decrease in funding from venture capital firms means increased competition for every dollar in an financial environment that is already unfriendly to new investments. As banks have reduced or eliminated companies’ credit lines and are unwilling to provide other forms of financing, entrepreneurs are now forced to look for more-creative ways to fund their operations. Venture capital funding, where investors provide financing to begin operations, support ongoing growth, and foster development of new ideas, is an increasingly appealing option for small businesses impacted by the recession. Whereas entrepreneurs may have previously resisted relinquishing any amount of control over their companies (see below) in exchange for operating capital, some organizations now find that they have no other choice if they are to survive.
Eight years ago today, I was a high-school senior finishing up his second-period math class when one of my school’s headmasters made the announcement that a plane had hit the World Trade Center. Like most everyone alive on that day, I will forever remember where I was and what I was doing when I first heard about the 9/11 attacks. But the tragedy of September 11 also had a profound impact on my life from that point forward. 9/11 marks the day the innocence of my childhood ended and my obsession with NPR, world affairs, and all things news began.
As The Wall Street Journal reports, UBS plans to release the names of 4,450 Americans holding UBS accounts as part of its settlement with the US and Swiss governments. The initial release of 4,450 names represents only about half of the total identities the US hopes to receive from UBS. With this information, the IRS and Department of Justice can begin criminal tax-evasion proceedings against these individuals. At issue is an estimated $10 billion on which US income taxes were never paid. Simultaneously with the announcement that UBS was releasing the names, the Swiss government moved to sell shares it held in the bank. This is largely seen as a move to distance the Swiss government from UBS at a time when it is increasingly interjecting itself into the banks affairs.
While the release of names was not unexpected (see “UBS, Swiss Government Reach Settlement with IRS” and “UBS Troubles Spread to Hong Hong“), it represents a significant weakening of the once-infamous Swiss bank privacy laws. To combat this problem, the process by which the IRS will receive the names is a bit tedious. UBS will first turn the names over to the Swiss government’s tax administration for review, after which the names will be forwarded to the IRS and Department of Justice. To begin, 500 names will be released, with the remaining provided in batches in future months. For the thousands of American clients of UBS who now find themselves in the government’s crosshairs, there is a bit of hope.
Until September 23, 2009, the US government is accepting voluntary disclosure of the accounts not previously reported to the Treasury. Theoretically, those who volunteer their information will face less-stringent prosecution than those the IRS discovers on its own. Either way, many individuals are likely to face criminal prosecution for tax evasion. Given that the average size of the UBS accounts in question is approximately $1 million, the fines and penalties can be substantial. Already, the IRS has begun prosecuting some former clients of UBS and reached settlements with others.
For more detail on the settlement and more information regarding the ongoing negotiations between the US government and UBS, see the Journal’s original article, “UBS to Give 4,450 Names to US.”
A recent editorial in The Wall Street Journal takes aim at the U.S. Postal Service’s monopoly over first-class and bulk mail. After 200 years as a monopoly, I think the writer is on to something. Then there’s that two-year, $14 billion loss. Indeed, I believe it’s time for change to come to the post office.
For the full editorial, see “US Postal Service Needs to Cut Back and Make Changes,” The Wall Street Journal, August 22, 2009.
Today, General Motors and Chrysler announced plans to advance money to their dealers to cover payments related to the government’s “Cash for Clunkers” program. Ford made no such announcement. In fact, Ford Motor Credit specifically stated that it is not modifying its relationship with Ford dealerships.
Could this be a sign that the sole US auto maker that was not bailed out by the government is running short of cash? As you might remember, Ford only avoided the need for government rescue because it mortgaged most of the company back in 2006.