Welcome to the CWBS Blog!

My name is Deepanjali Dalmia, and I am the Editor-in-Chief of Columbia Women's Business Society Publications for the 2012-13 year. Please check this blog frequently for updates on CWBS events, interviews with Alumnae, exciting internship or mentorship opportunities, and ways to get involved! We look forward to your participation!

Europe's Debt Crisis

By Jessica Chen, CE '14

The European crisis only seems to become increasingly complicated as the situation continues. The political climate is extremely hostile with multiple power transfers and government reforms. Georgios Papandreou, former Prime Minister of Greece, stepped down after popular demand for a unity government to tackle the debt crisis and was shortly followed by Silvio Berlusconi, former Italian Prime Minister, who also resigned this past Saturday after a seventeen year regime due to a loss of support even from within his own party for similar reasons.

The situation in Italy is proving itself to be of greater concern than that of Greece. Italy, the third biggest economic country in Europe, has a public debt of 120 percent of its gross domestic product, causing investors to lose trust in the Italian financial market and borrowing costs to increase to record highs. The European Financial Stability Facility was created as a special bailout fund set aside to help nations with financial crises, however the funds are too minute to bail out a large country like Italy.  Suggestions on using the European Central Bank as the euro zone’s lender has been strongly resisted by Germany as it would destabilize the Bank that ties the euro zone together and increase inflation of the euro. Unlike Greece, Italy poses actual global economic risks. With an economy too large for Europe to bail out or to allow defaulting, many economists wonder if the euro crisis has moved on to a whole new level.

The economic troubles have also caused an increase in tensions within the euro zone with more stable nations such as Germany and France becoming reluctant to risk their own country’s economy and financial markets to save those of the nations that are in danger. Currently, there has been talk of a reevaluation of the idea of a centralized currency within Europe and whether or not more stringent rules and qualifications should be necessary for countries to be included in the euro zone. Germany, France, and other more stable nations have become wary of supporting their fellow Europeans and are concerned for their own national economy. However this proposition was quickly dissolved as much opposition has been made against this idea, as it would create a “two-speed Europe”. The nations that were in danger of getting dropped from the currency would face a much more difficult path of reviving their country’s economic stability, creating a drastic difference in the economic health among European nations.

The world is far from seeing an end to the euro crisis. Greece marked the global awareness of the seriousness of the economic situation and need for immediate attention. Italy then followed with a larger public debt and last Thursday, Standard and Poor’s mistakenly downgraded France from its AAA rating, which caused a sell-off in French government bonds. Although a mistake, the incident reflected how France, considered one of the more stable nations, is also being affected by the crisis and is at the margin of its credit ratings.  

Durbin Amendement and Debit Fees

By Katie Chan BC '13

In a time when consumers are met with countless charges on top of more charges, the proposed debit card fees caused uproar from the American populace.  The nation’s largest bank announced last month their plan for a $5 monthly fee to customers who make debit purchases. While Bank of America’s $5 charge is getting the most attention because of it’s steep price, Wells Fargo and Chase are charging $3, while Regions Financial based in the south is charging $4. Bank of America  announced at the beginning of November their decision to hold off on the debit card fee. 

As the government steadily pinches away bank profits through regulatory overhaul, banks struggle to keep up.  The Durbin amendment, part of the Dodd-Frank law, lowers the average 44 cent transaction fee to a maximum of 24 cents. With over 30 billion debit card transactions annually, two dimes to a transaction adds up to billions lost—an estimated $6.6 billion per year.

Some criticism of the banks’ decision comes from their historical overcharging of debit transaction as opposed to credit transaction.  For decades, banks charged shopkeepers the same amount for both debit and credit transactions despite a significant cost discount for debit swipes.  Banks absorbed this extra profit until a 1996 anti-trust law was passed; but even then, prices were too high, as evidenced by the new number being enforced by Dodd-Frank.  [Even this number is high—The Fed had initially proposed the new transaction fee to be between 7 and 12 cents.] 

However, to play devil’s advocate (also as a credit-only consumer trying to find a job in the financial sector), consider the fact that banks are a huge entity with more than just a commercial banking aspect.  Bank of America has a negative bottom line net income of $3.6 M for their year ending December 31, 2010.  As a company, it only makes sense to find profit wherever possible. The recovery of the financial sector is a sensitive point of contention to the larger economic recovery, so why are we rallying for their failure?

The government’s imposition of the Durbin amendment almost halving debit card transaction fee logically leads to banks needing to regain that lost revenue elsewhere.  Now the money comes directly from the consumer’s wallet, rather than being hidden in a business’ cost of operation.  In an ideal world, though, businesses could pass on the lower costs to their consumer, but will they really?  Maybe it’s time to think again when you save West Side Market 20 cents as you obligingly kindly choose debit when possible.

Occupy Wall Street

Protesters will march tomorrow, Monday, November 7th from 181st street to Zuccotti Park in an effort to connect more people to the Occupy Wall Street movement. The march will end in Zuccotti Park, where protesters have been camping since mid-September, with a solidarity demonstration.

Further Reading:
Where Are the Women at Occupy Wall Street? Everywhere and They're Not Going Away
Occupy My Wallet: Moving Money off Wall Street

Do you support Occupy Wall Street? Tell us what you think! Leave comments on the post with your opinions.

Female Leader Profile: Christine Lagarde

Christine Lagarde
Director of the International Monetary Fund (IMF)

• First woman to become minister of Economic Affairs of a G8 economy and lead the IMF
• Replaced Dominique Strauss-Kahn at IMF in June 2011 
• French lawyer
• In the News: Lagarde has played a crucial role in containing the European Debt Crisis as Greece, Ireland, and Portugal have sought out bailouts to pay for their large sovereign debts
• Lagarde considers herself a follower of Adam Smith economics and supports steep spending cuts

Christine Lagarde is an excellent example of a strong female business leader. Known by her colleagues to be a very independent Director of the IMF, Lagarde has taken strong stands against austerity measures formerly practiced that she believes furthered the debt crisis. She requests that banks do more to stimulate growth and that central banks continue loose-money policies (lowering short term interest rates and making money less expensive to borrow) until recovery. She is a fearless leader who holds everyone to high standards; she pushed for the firing of incompetent managers at a French-Belgian bank who she considered incompetent. While on "The Daily Show" with Jon Stewart in 2009, she remarked, "I, for one, said, 'Management is out. They did a crappy job. They have to go.'" She is blunt and direct, which is often considered an aggressive attitude for a woman to have, but she is clearly taking the IMF in the right direction.

Further Reader
IMF Chief Urges Bold Action to Steady Global Economy
Investors Ask Whether Anything can Save Greece from Default
Lagarde, New IMF Chief, Rocks the Boat

Apple this Week

iPhone 4s vs. Expected iPhone 5

Jenny Mayrock BC'15

This week has been a crazy week for Apple. The company released the highly anticipated iPhone 4s on October 4, and two days later Apple co-founder Steve Jobs passed away. After the new iPhone was released their stock dropped 5 percent. Why? After Apple consumers waited for months for the hyped up ‘iPhone 5’ to be released, the public was disappointed by the iPhone 4s. Although it has new features, the shape is exactly the same as the iPhone 4. There is no doubt that Apple stores will be packed as consumers get their latest tech purchase, but a lot of people are disappointed that no new design was created. Below you can see the difference between the predicted iPhone 5 and the actual iPhone 4s. Will you buy the new iPhone 4s? Leave a comment!

Expected iPhone 5:

APPEARANCE: Technology blogs predicted that the design of the phone would be completely different in comparison to the other phones. They thought that the phone would be a much larger device with a 4 inch screen.

SERVICE: Predictions were that Sprint would be getting the iPhone 5  as an exclusive. This turned out to be false.

New iPhone 4s:

SHAPE: The same as the iPhone 4. Available in white and black colors.

FEATURES:

Siri: This application lets you use your voice to control your phone. It figures out the right apps to use to make calls, send messages, schedules meetings, reminders, ect. All from the sound of your voice.

Dual core a5 chip: Twice the power, seven times faster graphics than the iPhone 4, and improved battery life

8 Megapixel Camera: Higher resolution and video recording, and you can video edit directly on the phone

iOS 5: 200 new features such as notification center where its one place to see whats new on your phone. Similar to Blackberry BBM, I message allows you to send free messages to any iPhone or iPad with iOS 5

iCloud: Wirelessly stores music, pictures, and documents in your device

Social Entrepreneurship

Natasha Bhatia CC'14

A new business from Dallas, TX, Jatalo, sells urban bracelets and backpacks, but it’s more than just your regular backpack company.

                This summer when Jatalo founder, 17-year-old Aditya Viswanathan, visited family in India, he found that village children were unable to attend school because of financial need. The education in India is primarily through privately funded village schools, and tuition can be subsidized for less fortunate students. However, the cost of textbooks and related supplies still falls upon the families and, at times, keeps children out of school. Naturally curious and eager to learn, these kids may listen in on classes by peering over the school walls, but they cannot attend as full students. He came back to America with the problem in mind and created Jatalo to do something about it.

The model is simple. For every bracelet Jatalo sells, they donate a textbook to a child in need. For every backpack they sell, they donate a year’s worth of textbooks to a child in need. One backpack at a time, Jatalo is looking to end illiteracy worldwide.

                Unlike other companies, Jatalo works directly with the school administration and teachers to identify students in need and distribute textbooks. “This way,” Aditya says, “the students receive exactly what they need.” By eliminating the intermediary of a nonprofit or governmental agency, Jatalo utilizes the school’s knowledge of its students. He explains that the schools “keep tabs on who has left school and who is about to leave because of financial difficulty, and from these students, the administration selects further based on the student’s promise.” Then the administrators are then able to purchase based on their particular curriculum with Jatalo’s donation.

As a high school senior, Aditya is constantly surrounded by backpacks, so he sought to make his product unique even beyond its mission. Each Jatalo backpack is ethnically inspired, correlating to extant or future possible affiliate regions. “When I was in India,” he explains, “I saw that there was so much vibrant art out there that you don’t see in the everyday world. Why not combine that with something as commonplace as a backpack?” Currently, the two designs are inspired by a traditional South Asian weaving technique, ikat, and on October 2^nd, Jatalo announced on its blog that three new backpacks were in the works, one Mexican-inspired, one African-inspired, and one of an unknown variety.

Jatalo’s impact has already been felt halfway across the globe in Mumbai, India. 8^th grader Shelar Shraddha Harish writes, “I am very thankful to my sponsor for helping in my education and studies, and I give a promise that I will do my best.”

Columbia students receive a 10% discount at Jatalo with code books71.