The week@work – The Fed raises rates, Martin Shkreli is arrested, ‘The Big Short’ premieres and so does a small film about a galaxy far, far away

It’s that time of year when the world of finance takes center stage, only to be bested by the creativity of those who work in Hollywood. This week@work the Federal Reserve raised its benchmark rate, pharmaceutical executive, Martin Shkreli was arrested on securities fraud and the 2008 financial crisis originally chronicled by Michael Lewis, made its way onto the big screen in ‘The Big Short’. And that small movie from Disney? ‘Star Wars: The Force Awakens’ set new records with a $238 million weekend opening.

On Wednesday, the Wall Street Journal reported on the decision by the Federal Reserve to raise interest rates for the first time in seven years.

“The Fed’s decision today reflects our confidence in the U.S. economy,” Fed Chairwoman Janet Yellen said Wednesday in a press conference after a two-day policy meeting. “We believe we have seen substantial improvement in labor market conditions and while things may be uneven across regions of the country, and different industrial sectors, we see an economy that is on a path of sustainable improvement.

New projections show officials expect the fed-funds rate to creep up to 1.375% by the end of 2016, according to the median projection of 17 officials, to 2.375% by the end of 2017 and 3.25% in three years. That implies four quarter-percentage-point interest rate increases next year, four the next and three or four the following. It depends on whether the Fed’s forecasts for the economy—which have frequently been wrong in this expansion—hold up.”

The Fed rate increase was one of the ‘Four Charts That Defined the World in 2015’.

2014_Charts_Federal-690

Vauhini Vara writing in The New Yorker listed the other three:

“For the first time, fewer than ten per cent of people in the world were living in extreme poverty.

Facebook took over the world.

Greece’s economy started growing again—and then shrank.”

On Thursday, Bloomberg Business noted the arrest of Martin Shkreli, the infamous pharmaceutical head, and everyone’s leading candidate for this year’s Scrooge. You may remember Shkreli from his multiple media appearances after raising the price of the drug Daraprim from $13.50 a pill to $750. Apparently he not only violated the golden rule, but also an unspoken pact among those in financial services, not to draw attention to themselves or their activities.

“While the 32-year-old has earned a rare level of infamy for his brazenness in business and his personal life, what he was charged with had nothing to do with skyrocketing drug prices. He is accused of repeatedly losing money for investors and lying to them about it, illegally taking assets from one of his companies to pay off debtors in another.

“Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Attorney Robert Capers said at a press conference.”

He was released on bail on Friday and did what we would all do after being publicly shamed, began live streaming, chatting with ‘supporters’.

“Which brings me to a new movie the enemies of financial regulation really, really don’t want you to see.” writes nobel prize winner, Paul Krugman in The New York Times.

“But you don’t want me to play film critic; you want to know whether the movie (The Big Short) got the underlying economic, financial and political story right. And the answer is yes, in all the ways that matter.

I could quibble over a few points: The group of people who recognized that we were experiencing the mother of all housing bubbles, and that this posed big dangers to the real economy, was bigger than the film might lead you to believe. It even included a few (cough) mainstream economists. But it is true that many influential, seemingly authoritative players, from Alan Greenspan on down, insisted not only that there was no bubble but that no bubble was even possible.

And the bubble whose existence they denied really was inflated largely via opaque financial schemes that in many cases amounted to outright fraud — and it is an outrage that basically nobody ended up being punished for those sins aside from innocent bystanders, namely the millions of workers who lost their jobs and the millions of families that lost their homes.”

Need a holiday escape from everyday villains and economic reality? The folks at the ‘house the mouse built’ offer a 135 minute visit to an alternate universe.

“Chewie, we’re home” teases the plot in the trailer for the new Star Wars movie. This week the cast of the seventh installment of the intergalactic saga walked the red carpet, four blocks long, at the Hollywood premiere.

Variety covered the opening weekend box office results.

“Director J.J. Abrams’ nostalgic take on the series of space operas George Lucas created four decades ago was a hit with critics and fans, earning strong reviews and an A CinemaScore. Its opening soared past the previous high-water mark of $208.8 million established last summer by “Jurassic World.” It more than doubles “The Hobbit: An Unexpected Journey’s” December record debut of $84.6 million.

Globally, “Star Wars: The Force Awakens” scored the second-biggest opening in history, earning $517 million worldwide, behind only “Jurassic World’s” $525 million bow. Unlike “Jurassic World,” the seventh film in the “Star Wars” franchise did not have the benefit of showing in China on its inaugural weekend. It opens there on Jan. 9.”

 

 

 

 

 

 

This one is for the Class of 2009

This past weekend Paramount Pictures released ‘The Big Short’ based on the 2010 Michael Lewis book of the same title about the build up of the housing and credit bubble in the first years of the new millennium.

There were many casualties of the worst financial crisis since the great depression.  I thought it might be worthwhile, as moviegoers line up for tickets, to revisit that time and the impact on those who graduated from college in 2009.

It took a few months for the ripples of economic crisis to reach college campuses. But in the fall of 2008 corporate recruiters began to cancel on-campus interviews and career fairs shrunk to a quarter of their previous year’s participation.

Students who had entered college in the fall of 2005 faced optimistic prospects as the economy was booming and entry level jobs were plentiful. But the global economy began to turn in the spring of junior year, with many heading off to summer internships in anticipation of transitioning to full time work at graduation.

By final exams in 2008, things were looking bleak. Here is an excerpt of a blog I wrote on December 11th.

“When the semester began in August, not even the experts could have predicted the level of change we would experience this fall. While each academic year provides opportunities to embrace challenge and celebrate success, these past four months have created historical moments with the potential to redefine our place in the world.

As you are writing your final papers and studying for exams, let’s take a minute to review what we have learned.

First, we are in an age of globalization. If you have been hiding under the covers for the past ten years, the economic downturn brought the reality of the global banking community to the forefront. In a few short months we have learned more than we may have wanted to know about real estate, mortgages, investment banking, insurance and the auto industry. And we now have a better sense of how our domestic economy depends on the health of these industries. For many of us, the impact of the downturn in the economy has hit close to home with friends and family out of work.

Change can be difficult. If you are a freshman this year, your transition from high school to college is a fresh memory. There was the excitement of a new place mixed with missing friends and family. With every new opportunity to change there is a sentimental longing for the past. For seniors, there is the anticipation of the next step: graduate school, professional school, a new job or and entrepreneurial start up. It is a time of hope mixed with uncertainty.

You are a part of a historic moment in time. Become an active participant. If opportunities in a career field are limited, look toward the new careers emerging as a result of change. All you have learned this semester in your classes, organizations and internships have provided you with a solid foundation to adjust and adapt. This is your strength.”

If the rumors are true, the Federal Reserve will raise interest rates this week, bringing an end to the economic downturn that began in the spring of 2008.

I think it’s important not to forget the lessons learned in 2008 and 2009. Check your social network and schedule a sit down with a 2009 graduate. Get a first person account of how to recalibrate a career path to eventually arrive at success.