We are going for gold!

Dear Followers,

One of the headlines in this week’s financial press was the recently new high of the gold price and the further decline of the dollar as a currency. On Monday the 23^rd of November 2009 the

gold price has reached a new record high while the dollar was down against the euro at $1.4965.

“Should I bet one the dollar or on gold”

I compared three articles from the Financial Times, The Times and the German Die Welt which all reported on the same topic using very different styles also covering different information with different focuses.

The article from the Financial Times where the synonym “Greenback” was used for the dollar was the shortest of all three articles. It is written without any form of bias and makes very clear that the FT is a financial newspaper, which is written for professionals with a large amount of market knowledge and understanding. It is more of a clear report of facts and numbers, which focuses on the development of currencies, the gold price and markets all over the world. There is very few to no explanation regarding the information. The reader has to already be well informed about the situation and has to be able to deal with abbreviations and raw information such as pure market movements and figures.

The article published in The Times on the other hand in my opinion is heavily biased and in my opinion almost gives the reader a recommendation what to do. This can already be identified by title and headline which say “ Be brave and buy the dollar; The dollar tumbled to a 15-month low against top currencies last Monday so it could be time to snap it up”. This will not necessarily influence someone who has market knowledge and can make up his own mind but for the uneducated reader this could clearly be seen as an instruction. I personally find the article very interesting and informative since it clearly reports the opinions and gives statements of well known individuals from the market for either side, the ones that see gold or dollar falling and vice versa. Another point that in my mind states that the article is biased is that in two examples it clearly states and directs the reader on how he could speculate, even giving examples of banks he could use, on the currency and commodity movements in order to make money and the author makes it sound relatively easy. I think the article is very good from an informative point of view since it gives the opinions of market insiders as well as basic information, but it has to be seen very different. I personally don’t like the idea of the heavy bias I can identify and the “advertisement” for market peculations and buying the dollar. In my opinion this is simply not good journalism since it should be plain informative and not guiding, this could almost be seen as a minor form of propaganda, which I consider journalistically unethical for an established newspaper.

The article from the German Die Welt focuses more on gold than the dollar and in my opinion is the best one this week. Even though it includes a lot of numeric and factual data it still makes interesting comparisons for the reader and includes historical and current information, which makes it easier to visualize and understand the topic. It includes historic information about the matter and draws very modest future predictions, which help the reader to analyse and prepare his own situation. There is no form of bias involved in the information and the writing and everything is clearly but briefly explained. It explains the significance of gold for private investors as well as banks, investment firms and governments and their participation and share in the market which I consider very interesting. It overall is highly informative and gives a good amount of factual data which is without any bias wrapped into interesting writing style and sarcasm.

Looking at the information given in the three articles it is hard for me to draw a conclusion. Looking at the current instable situation and the importance of gold and its purpose I definitely do not see the gold price drop in the close future, but I am not in the position to make predictions on either, the gold price or the development of the “greenback”. Even though the article from The Times tries very hard to convince me to invest in the dollar I would currently not believe them. I still strongly believe that

“The press should inform me so I can make my own decisions, the times where the press puts decisions in our heads should be long gone”

Bernie Madoff, the popular Criminal?

Dear Followers,

Last weekend the first one of a number of Auctions selling fraudster Bernhard Madoffs personal belongings took place in Manhattan, NY.
The goods, which ranged from valuables such as Jewels and Watches to personal items like jackets were auctioned to at least reimburse a fracture of the money stolen by Madoff to his victims.
Since Madoffs crime is estimated to have a total magnitude of at least $21billion, I think the auction has more of a symbolic than financial value but I will further explain this point later.

The auctioned goods brought a total of over $942,000 and therefore nearly twice the initial estimate and I was asking myself,
“Why are there premiums and not discounts on these stolen goods?”

As sources for my information I used 3 different articles which were published in the German Welt, the Guardian and BBC News.

The article from the German Die Welt in my eyes could not be any more boring in style even though it does include all of the necessary information regarding the matter.
There is no form of bias or opinionation but neither is there any form of humour or passion about the matter. I think since this is a weekend newspaper and this is a very significant and touching subject for thousands of people it should be written in another manner. It simply is a listing of facts, which in this case are items and prices and a little description of scenery and situation around it. It only lines out that low value personal items were sold for far more than expected while valuable goods remained below minimum bid. This means that people were souvenir hunting and not looking for value which the reader has to interpret himself.

The article published by BBC News is basically exactly the same thing just that it was translated into English and summarized a little bit. It is simply an alignment of the facts without any form of bias or passion about the topic. I would personally say its better than the article from Die Welt since it is more compact. If it isn’t interesting but just informative there is no need for anything but the basic information in my opinion.

The article which was published in The Guardian is by far the best one in my opinion especially taking into account it is a weekend article. Most likely the reader does not just look for information but also for reading entertainment which the author does provide in this case. The article includes the main important data about the happening such as the goods sold and the prices achieved for them but other than the other two it also includes informative and important background data. It does not include any bias but for example outlines the severity and consequences of Madoffs crime by stating that it was the cause for at least 2 suicides. Another aspect I find highly interesting is that it includes the statements and therefore opinions of some of the bidders, because I was asking myself what would be the incentive for people to acquire a criminals personal belongings. One person said that its like a piece of the modern titanic to have souvenir from Madoffs yacht, another bidder said he unites investment with good cause for the victim.

Coming to the writing and reporting style of the articles first in think the only one out of the three that is good is the one from the Guardian. One should not forget that a weekend newspaper for many readers is not just source of information but also entertaining occupation. Therefore there should be some kind of humour about how the things are written. Especially for a topic like this, which affected people all around the world or at least touched their feeling of justice, the author could try and make it interesting and include the opinion and situation of people it affected. Reading should also entertain and not just inform.

Regarding the event as such I think that it is more of a symbolic value to this auction than a real purpose behind it. The fraud committed by Bernie Madoff over the past 4 decades caused investors a total damage of at least the estimate of $21 billion, at least 2 suicides and a lot of tears and destroyed careers, fortunes and existences. Auctions which are estimated to bring a total revenue of $500,000 are hardly going to cover that. I think it’s more of the symbolic value to show the people what will happen to someone who behaved like Madoff. He is destroyed as a consequence of his acting, he will die in prison and even his personal life is for sale.
The message that is being sent is;
“America does not tolerate this behaviour, there are consequences.”

What I myself find very surprising is how much for and that people even buy Madoffs items. The fact that for example his Baseball Jacket with “Madoff” on the back goes for 29 times the estimated $500 but a vintage Rolex of real value remains unsold shows me that people want Madoff memories and not goods at bargain pricing as usually at an auction. I find this very confusing since he in my mind, and on paper, is a criminal. This person caused a lot of personal failures for others and even suicides, so I ask myself are it even politically correct to sell his belongings?
It has no positive effect for the victims since the financial results are simply too low to make up for the damage caused and people see it more as a joke than a tragedy which can be told from bidders statements.
The question that remains for me and I really don’t understand is

“Why do people want the belongings of a criminal as if he is a hero?”







Sources:

http://www.guardian.co.uk/business/2009/nov/15/bernard-madoff-auction-sheraton


http://news.bbc.co.uk/1/hi/business/8361024.stm


http://www.welt.de/finanzen/article5220779/65-000-Dollar-fuer-eine-Luxus-Uhr-von-Bernie-Madoff.html

Whats the final price for British Chocolate ?

Dear Followers,



A major topic in the international financial press this week once again was the takeover of British Cadbury by the US food giant Kraft. I personally find the situation very interesting since it is an extremely large deal taking into consideration that we currently have a global financial crisis and this deal is worth about $17 billion.


This acquisition battle has been going on and has been of extremely high interest for the financial world for a while now, but due to UK takeover rules is coming to a determining point on Monday the 9th of November 2009. If Kraft does not make a formal offer by 5pm English time, they loose the right to make any offers for the following 6 months.


The article from the Financial Times basically just reports clearly and not very precise what is happening and why that is the case. The author included some figures and described the situation of the bidding and the two companies. Even though there is no bias and this article in not opinionated in any way, I myself find two things in this article very surprising. The first is that the author almost does not mention at all the UK takeover law is what is pushing and putting Kraft in a difficult situation now. I find that extremely important and determining for the entire process and therefore clearly see a lack of that information. The second thing is that the author clearly seems to find it remarkable that the Kraft CEO is a woman, Irene Rosenfeld, since other than the Cadbury CEO her name is in bold letters in the text. He must see that as something special which could be interpreted as a form of bias. Overall the article is easy reading but it is not too informative if one is not already familiar with the matter and story. For the information and help it gives it is rather long and could be seen as waste of space.


The article from Manager Magazin, a German financial newspaper, in my eyes is a lot better and a lot more informative for the reader without any extra complexity. It is very pleasant to read since they use a rather entertaining sarcastic language in some cases and it is very well structured. They include some figures as well as a little bit of background information and also give some suggestions on how the two companies could behave and make their moves taking Into account the framework of the deal and the legal situation England provides. One thing I have to point out Is that they also mention in a special way that the Kraft CEO is female and see this as something special apparently so the FT is not alone. Overall it is a very easy reading but very informative article which is interesting and informative reading for a broad range of people.


The third and in my eyes by far the best article about this topic is from The Guardian. It already has two bullet points right under the title which give the reader a basic but clear idea of what the matter and the problem is. The article does not just briefly describe the situation but also clearly mentions legal framework, the financials of the deal, Kraft’s situation and strategy as well as background info about both organisations. This obviously is not of interest for every reader, but in my eyes since it was cut short was very informative and interesting. The article is in no form biased or opinionated and gives everybody, even people that previously had no idea about the topic or the matter, a very good insight and entertaining story and information.


I myself see this especially at the current point in time as a very interesting topic and deal. This is an acquisition between two more or less healthy companies during a global financial crisis and it is a very big deal looking at the value. Kraft is trying to further increase its global power during the financial crisis by bringing another very strong make into their conglomerate, but they try to get it as cheap as possible.

“Is the giant winning in rough weather”?


The problem they have now is the UK takeover law which does not any longer allow them to gamble slowly and approach their target in a subtle way. They had their time and now they either have to
“take it or leave it”.


This makes it a tough call for Kraft as also analysed by their main shareholder Warren Buffet. They have to make an offer where they are more certain not to get declined since now it is formal, but they still then run the risk of overpaying. The law puts them in a very difficult situation where they either win or loose but they have to make the call now, their time has run out. If Kraft would have time to keep on informally negotiating the situation would be completely different, but they now have to make their final decision. If they don’t make the winning offer they loose and have to wait, if they do not make an offer they walk empty handed. We will see today and in the following weeks how things are continuing and if Kraft is a winner in this game, but we have to always keep in mind


"Getting what you want may not make you the winner if the price you paid was too high"













Sources:
http://www.ft.com/cms/s/0/8cda0890-cb1d-11de-97e0-00144feabdc0.html
http://www.manager-magazin.de/unternehmen/artikel/0,2828,660062,00.html
http://www.guardian.co.uk/business/2009/nov/08/kraft-cadbury-takeover-deadline/print