The Bull & Bear | October 2014 by The Bull & Bear

The Bull & Bear October 2014

Students Taking A Stand A Publication of the

Table of Contents Issue 2, Volume 13

Editor’s Note

News (4) Going International (6) SSMU Building Fee Passes (8) Faculty Presidents on the Year Ahead

Lifestyle (10) Montreal’s Cat Cafes (11) Science of Dreams (12) All Things Caffeinated

Feature (14) Consent 2.0 (16) Hong Kong Protests

Opinion (19) Improving on Activities Night (20) McGill’s Overlooked Musicians (22) Safe Space at McGill

Business (24) Buy High, Sell Low (26) Co-CEO Management Structure (28) Asian IPOs (30) The Fed’s Tapering Policy The Bull & Bear is published by the Management Undergraduate Society. The content of this publication is the responsibility of the Management Undergraduate Society and does not necessarily represent the views of McGill University.

t’s that beautifully deceptive time of the year again: the landscape is bright with autumn colours, pumpkin spice lattes are back and the first long weekend of the semester is just around the corner. Don’t be fooled by the blissful illusion of apple picking, the promise of a home cooked meal or the panoramic views at the top of Mount Royal. Midterms are coming! Get into your sweats, grab some coffee and get cozy in your new home for the next month, the library. Hopefully, you are semi prepared for the onslaught of irrepressible stress that inevitably accompanies exam season. If you aren’t, consider petting puppies. Sadly, the campus Blue Ribbon therapy dogs are not available, but local shelters are always looking for volunteers. Taking an hour to go outside is likely to keep those feelings of utter helplessness at bay and preserve your sanity; at least until you are confronted with finals. Your hectic schedule may not allow you to venture out into the world much these days, but rest assured, The Bull & Bear is here to keep you informed and entertained during these harsh times. In this issue, we bring you feature pieces addressing the Hong Kong protests and opinions on the redefinition of consent on California higher education campuses. News reports on the insufficient funding of international student services, the goals of student faculty presidents and how we avoided cuts in services with the passing of the SSMU building fee. Business tackles IPOs in the Asian world, co-CEO managing structures, Federal Reserve tapering and counter-intuitive trading strategies. Lifestyle offers reviews of Montreal’s Cat Café and What the Butler Saw and takes a look at all things caffeinated, the realm of dreams and how to survive a Canadian winter. Opinion delves into the topics of safe space at McGill, the mess that is Activities Night and the visibility of student bands. My one page of fame ends here and I will kindly wish you merde on your exams and assignments. Remember to breathe and take everything in stride. As a seasoned McGillian, I can assure you that everything will be okay. Stéphanie Thomas Opinion Editor

Briefs

Editorial Board October 2014

Your guide to events around campus and the city Max Feinsot Executive Editor SSMU General Assembly October 22nd, 4:30 p.m. Open to all SSMU members who want to help make quorum! Held in SSMU Ballroom.

Halloween Fright Fest at La Ronde Every weekend from October 4th to November 2nd Three haunted houses, one zombie lounge, and way too much fake blood.

Montreal Zombie Walk Saturday, October 25th, 12-6 So. Much. Fun. More. Brains. Held at Place des Festivals (Metro Place-des-Arts).

Alain Kasparian Managing Editor Sijia Ye William Werblow Chief Layout Editors Yuliya Gorelkina Suzanne Ma Layout Editors Nat Carson Stella Lee Media Editors Ana Maljkovic Kathleen Tully Julia Rodriguez News Editors Chukwubwuikem Nnebe Stéphanie Thomas Opinion Editors Kimberley Evans Chelsey Ju Lifestyle Editors Alain Liu Arash Nayerahmadi Business Editors

MTL À Table – Montreal’s Restaurant Week October 30th to November 9th Expensive food for prices more affordable than those at Première Moisson.

Kosa Akra Ebuka Ufondu Web Editors Paul de Bretteville Marketing Director Daichi Ishikawa Cover Photograph

Going

NEWS

International International Student Services is challenged by growing student body and budget concerns Julia Rodriguez, News Editor

cGill is now home to a record number of International Students. Many have simply crossed the border from upstate New York while others are the only student from their home country studying at McGill. Given the breadth of international student’s experiences and needs, administrators struggle to offer them meaningful and effective service. This issue is compounded by a sky rocketing international student population and stagnating budgets. Nonetheless, both the administration and student- led organizations work to help students feel welcome in their new environment. Disproportionate Growth McGill is experiencing an influx of international students. There are now 9,536 international students enrolled at McGill -- a number that has grown 39 percent in the past five years. Students without Canadian passports now comprise over 20 percent of the student body. Yet, despite this significant growth, budgets to fund services aimed at this group have not increased. “We have experienced almost 40 percent growth in the international student body yet our actual number of staff has not grown,” explained Caroline Iss, a student

advisor for International Student Services. International Student Services assists students with all non-academic aspects of the international student experience. This includes immigration assistance, healthcare, planning orientation activities, and helping students adjust to life in Montreal. Currently the office employs only three general advisors, an advisor for specific Mastercard scholarship students, two clerical staff and the program director. Diverse Needs The small staff works hard to meet international student’s need but cannot always match the high demand for their services. “Sometimes, if it’ s a slower part of the year, we can respond to requests immediately,” clarified Iss. “However, during our peak periods, we can’t always get back so promptly and that can be frustrating for students.” Despite the overwhelming growth of the international student body and the significant strain on existing services it seems unlikely that the existing staff and budget will grow. “Just like everyone else at the university we have to work within our limited resources,” elaborated Iss. “We of course do as much as we can but the needs of our students are so diverse that it can be challenging.” International Student Services works with undergraduate students, graduate students, doctoral candidates, and postdocs. “A post-doc is here on a work permit and often comes with their family. They have very different needs than a first-year undergraduate student,” described Iss. “It is challenging to give help when there are such diverse needs. [Were the resources available] we would like offer more specific services to all of the groups work with.” Home Away From Home Given that International Student Services is limited by its budget it can not always work to foster relationships between students. Many student groups work to fill this gap by building community, solidarity and understanding among International Students. The McGill International Student Network (MISN) is one such organization. MISN works to meet the needs of international stu-

October 2014

NEWS

International Students by citizenship 2014-2015

dents given the specific challenges they face. “Being international definitely impacts your experience at McGill,” Said Kanika Wadwa, MISN Co-President. “Adapting to a new culture is so unique. You have different challenges that a domestic student wouldn’t necessarily have.” “You don’t only have to adapt to a new Canadian lifestyle but to the French aspects of Montreal,” elaborated Co-President Marie Ines Lou. MISN tries to ease this transition by creating a network of students who are facing similar challenges. Lou noted that MISN is a resource for everyone, not just international students. “Even students from Vancouver or Toronto are new to the city,” said Lou. “We try to reach out to Canadians and let them know that we are available to them. Part of our job is making sure all students feel like they are integrating into the city.” “You don’t have to be from somewhere exotic to be international,” added Wadwa. Redefining International In this spirit MISN hopes to reach out to more domestic students not only to support them in their transitions but also to connect Canadians to the international student body. “Part of the experience for international students is to connect to Canadian students. We hope to connect the two

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groups through our events so we are always encouraging Canadians to attend,” commented Wadwa. “Part of our mandate is to highlight the cultural diversity at McGill,” Wadwa explained. “If Canadians want to meet people from around the world, working with MISN is a great way to do it.” MISN doesn’t focus their attention solely on the McGill community. Locally, the organization has programs connecting students who would like to practice their French with a student at UDeM who would like to practice their English. MISN schedules trips to neighboring cities such as Toronto and New York City to offer students an opportunity to explore North America. Ongoing Challenges As the international student body continues to grow the demand on both student networks and the McGill administration will grow considerably, an issue that is compounded by growing budget concerns. Despite significant challenges, Iss feels that the work done by International Student Services remains relevant. “Any international student who has opted to leave the comfort and security of home to come study in another country... deserves my respect and admiration,” she concluded. “Its very humbling and I’m eager to help them.”

NEWS

Students Opt-Into University Centre Building Fee Clubs and Services will continue to provide services without increased rents and fees Bria Hiebert, News Writer

rom September 24 to October 1, as part of the Fall 2014 Referendum, students voted on the implementation of a new non-opt-outable student levied “University Centre Building Fee.” The fee has been approved by popular vote. This was the second time this fee was proposed to the McGill undergraduate student body by the Student’s Society of McGill University. Students voted against the University Centre Building Fee during the Winter 2014 referendum period. Breaking Down the Fee The two part question asked students to first vote on the creation of the fee which will be charged at a rate of $5.78 per full-time student per semester and $2.89 per part-time student. The fee will be implemented starting Fall 2014 and paid up to and including Winter 2021, at which point the current SSMU building lease agreement with McGill will end and lease negotiations will begin again. The SSMU Building Rent and Utilities Fee will be indexed to increase with inflation at a rate of 5.6 percent per year at the beginning of the Fall semester each year. SSMU states that this is to compensate for the year to year rent and utilities increases agreed upon between SSMU and McGill. Excesses generated by the fee will be internally restricted within SSMU’s Capital Expenditures Reserve Fund for building renovation projects. The above schedule outlines SSMU’s proposed introduction of the University Centre Building Fee and breaks down the increases in rent as well as SSMU’s portion of utilities. The fee comes after four years of lengthy negotiations between the Royal Institution for the Advancement of Learning, McGill and the SSMU. The parties agreed upon a 10 year lease, from the 2011-2012 school year to 2020-2021.

The costs of operating the University Center have increased under the new agreement and will continue to increase yearly until the end of the lease. SSMU states that the fee will be used to pay the rent and utilities under the current agreed upon lease. The new lease stipulates that SSMU must pay one quarter of the utilities expenses for the building, an expense which was previously paid for in its entirety by the University. Energy costs will increase yearly according to inflation. SSMU currently owes McGill $230,000 for rent and utilities for the 2011-2014 period during which lease negotiations were ongoing. What Was Avoided? If the fee did not pass SSMU stated that they would be forced to cut services to students in order to pay rent and utilities to McGill. This would lead to a reduction in University Centre operating hours, hiring and salary freezes for all staff members as well as the elimination of all SSMU research. SSMU would also be unable to hire a Sustainability Coordinator, a position that has been vacant since last year. Additionally, Gerts would face significant increases in prices, nominal fees would be charged for room bookings for all students groups, and there would be increases in

October 2014

NEWS rent costs for student groups using the building. There was also potential for “further commercialization of the space in the University Centre including but not limited to the replacement of the Nest with a commercial tenant and the reversion of 108 to a commercial tenant,” (Motion Regarding Implementation of the University Centre Referendum Question). David Olmstead, Operations Coordinator for Walksafe stated that despite the outcome of the vote, Walksafe “ [would] like to maintain the same level of service but the big issue is that if the building is closed at night and the weekends it becomes really tricky for us to get in.” He continued by explaining that if SSMU were to begin charging rent to services it would not be affordable for Walksafe as the organization “doesn’t have a big budget… And at the very worst it would cause a full shut-down of the service.”

Round Two The original fee that was proposed would have cost full-time students $6.08 per semester and part-time students $3.04 per semester. Out of those who voted, 53.6 percent voted against part one of the question and 60.8 percent voted against part two of the question. Chris Chiavatti, a U3 Microbiology and Immunology student has been vocal on the “No” side, (although there is no official “No” campaign). Chris, who supported the fee during the winter 2014 referendum, was unhappy that the SSMU Legislative Council asked students to vote again, “that to me is very unprincipled” said Chris. “In general I think there are a lot of problems with the way SSMU is being run… I think the biggest problem is that people serve a single year term and then they graduate and there is no way to hold them accountable.” He stated that “improving services, cutting down on a lot of waste and being more transparent” could help rebuild trust between students and SSMU. In response to news that the fee passed during the referendum, Chris said “ I am glad that services will be maintained, particularly student support services such as MSERT, SACOMSS, and Queer McGill. However, I am also concerned that the SSMU executives believe that the result of the vote is an endorsement of business as usual… SSMU execu-

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tives should avail themselves of the opportunity created by this campaign and begin meaningful consultations with the entire membership as to what students consider to be funding priorities and cut programs deemed to be beyond their useful terms.” According to results published by Elections SSMU on October 1, 69 percent of students voted yes to part one of the question and 55.2 percent voted yes to part two of the question with a total of 4890 students voting. The Future of SSMU Kathleen Bradley, VP Finance and Operations for SSMU acknowledges students frustration with being asked to vote again on the same issue. However, she noted that “no one last year really campaigned.” Concerns were raised about the potential for another referendum if this one failed. “One way or the other we work with the decision, no matter what, but the biggest thing was that students make informed choices,” explained Bradley. SSMU has been operating on a contingency budget since the fee failed to pass in the last referendum. SSMU will now transition to a permanent budget. In the instance of a no vote SSMU would have had to rewrite their long term financial plan, as a not-for-profit corporation SSMU is required by law to have a long term financial plan that outlines where their reserve funds go as they must break even. If SSMU is not able to make deposits into their Capital Expenditures Reserve Fund it limits their ability to make long term capital expenditures and investments in the building. “The building is pretty essential to our functioning,” stated Bradley. Bradley is optimistic that opening more informal channels of communication between students and representatives can help address issues early on and keep students informed. “Having more informal areas and arenas and meeting spaces, that aren’t necessarily for contentious issues or debate or formalized presentation, but meet and greet spaces where you can come and talk to people, I think that is really valuable,” said Bradley.

NEWS

Connecting

Students to their

Studies

Major faculty association presidents address the year ahead Kathleen Tully, News Editor

very week, listservs flood in and Facebook event invitations are sent out to most students at McGill by their respective faculty associations, who attempt to connect students to upper administrative divisions. Therefore, the voices of these presidents are a crucial element in learning what each faculty has planned fro the upcomming year. The four largest faculties, the EUS, SUS, MUS, and AUS represent the majority of McGill Undergraduates. The presidents of each association, though part of a whole, serve as a crucial figure in facilitating the process of connecting faculty to student. By mediating and managing, a departmental president is ultimately responsible for assuring that students have access to services they need, from the departmental, to the faculty-wide level. Therefore, the voices of these Presidents are a crucial element in learning what each faculty has planned for the upcoming year. Strong Beginnings With the organization of Frosh and the array of other events welcoming students back to campus, the faculty presidents have had an extremely busy first couple of

months. All presidents claim that Frosh went very well within their respective faculties. Herrick credits the SUS frosh success to the interview and training process for leaders, “first year a two-step process was used, where the first session modeled after medical school MMI’s, [included] a role playing session, where leaders walked into separate stations and had to deal with various situations—actors were the coordinators themselves, with more evaluation.” This quote is awkwardly phrased but I guess if it’s a quote...then meh. Shannon Herrick, SUS president, also suggests that SUS events were more inclusive, and less alcohol-focused than years past due to the increased popularity of the Sober Frosh Group. “People join and chose to lead for numerous reasons; majority were of age but just preferred not to be in a more drink-centric environment.” said Herrick. The AUS also had a successful September, despite the resignation of their VP Internal and VP Finance during the first month of classes. Liu ensured that the situation did not impede any of the processes for the AUS, “We’ve had two resignations and that was unfortunate, but we’ve had this handled...we plan on

October 2014

NEWS having a by-election for the VP Internal in October, and a new VP Finance has already been appointed in our first council.” Robert Forestall EUS president, hopes the energy of opening events for the EUS continues throughout the rest of the year, “OAP, Frosh, and our first few Blues Pubs of the year have had astounding success thanks to our hard-working exec team, managers, coordinators, and volunteers. But it’s not only about the numbers. The momentum is still strong with much more to come so we’re very excited for a productive year to come!” Ensuring equity, diversity, and sustainability Each executive team had a common goal this year of creating new programs, or bolstering old one. The plan is to provide students with a nondiscriminatory and environmentally sustainable experience. Herrick (SUS) proposed an increase in equity awareness. “This year we are definitely honing in on our unofficial theme of equity, so the majority of our brand new initiatives are expanding and developing the role of the equity committee, and increasing sustainability within the society through DIY workshops and educational events.” Forestall and the rest of the EUS executive have also made equity topics a highlight of their events this year, with a Forum on Inclusivity and Diversity in Engineering scheduled for October 9th in the SSMU Ballroom. It will be the first forum of it’s kind within Engineering. For Ava Liu,, this focus highlights a greater effort to better integrate student services into the faculty so students have better knowledge and access to the programs available to them. As Liu explained, “My goal, even in my platform, was to bring more student services into the AUS in line with mental health, sexual health, and then to bring more of those services and support systems into what we do with the AUS.” The AUS is also holding an equity workshop similar to the EUS’s for their council in coordination with the Social Equity and Diversity Office. Forestall and the EUS council have made sustainability a key initiative by organizing an academic forum at the beginning of October focusing on building a sustainable curriculum to integrate into the Engineering Faculty. The EUS sustainability committee, Sustainability in Engineering at McGill (SEAM), is also actively pursuing this concept this year through activities such as bringing reusable cups back to Blues Pub and organizing tours in environmentally-conscious neighbourhoods in Montreal. Addressing the Constituents The EUS, SUS, and AUS are all in the process of revising their constitutions to better represent their current student bodies. Liu is hoping to achieve greater coherence within the AUS through this round of revisions, “[we’re]not so much in looking over the

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constitution but more with bringing together all of the bylaws, departmental constitutions and having it more complete as a package. Possibly to look into seeing how our model will fit with the board of directors,” elaborated Liu. Within the AUS, Liu is also working on a number of projects to improve the connection of the AUS with their students, “I’m working towards improving our lounge spaces, trying to make spaces more comfortable and friendly and bringing a more homey student support kind of feel to the lounge to support what the AUS does….Also, we had a big surplus a few years back and I’m hoping to complete a big upcoming project with that.” Meanwhile, president Herrick aims to encourage more participation among students in the Faculty of Science, “My main of objective is to slowly but surely combat the surmounting political apathy within the science student body,” explained Herrick. “I have been operating at the departmental level by increasing my own contact with the departmental associations... by holding roundtables with the executives, the individual Departmental associations, along with departmental information sessions.” An eventful year ahead The event that Herrick is most anticipating this year is Social SUStainability Week occurring from October 20-26. Activities during the week will range from guest lectures to athletic and night time activities, with all events focused towards providing funding for AMI Quebec, a Montreal-based support and advocacy group helping families with the effects of mental illness. As Herrick expressed, “all I’m saying if that a certain amount of money is raised, then my entire executive may or may not be pied in the face.” Throughout the first week of October, the AUS held a Health and Wellness week in collaboration with the Faculty of Arts. Liu plans on having similar social services events throughout the year. Liu reflected on the importance of the event, “It’s interesting to have events occurring like this, taken on by the AUS and also with the faculty, it is nice to see the administration take note of these important issues.” Forestall is excited for the events of the upcoming year like all the other presidents. “We are in a very exciting time at the EUS -- student involvement is growing, many clubs and committees are working together, and every day there’s someone taking a new initiative, so I can’t wait to see what will be accomplished.” Forestall enthused, “Many Departments and clubs share the same values and recognize that encouraging our first year students to get involved is key, so we’re seeing mentorship programs develop as a result. I look forward to seeing how all of these programs grow.”

NEWS

Montreal Cat Cafes

Purrfect, adorable therapy

BY: JESSICA FARBER

hile the Montreal community still buzzes from “Le Café des Chats” (the first cat cafe in North America) opening on St. Denis, the announcement of another just a stone’s throw away was hard to believe. Nestled in the Upper Plateau on Duluth and Hotel de Ville, Montreal’s newest cat café has become a fluffy haven for cat enthusiasts and gourmands alike. Unlike your average overrun commercial café, Café Chat L’heureux is home to a wide variety of clientele, though mainly a younger crowd. Young kids, hipster dads, soon-to-be cat ladies, and university students are some persona types can be seen relaxing amongst the felines on mellow afternoons. Before going into the café, one might think that there would be cat hairs all over the place, and the smell of litter boxes floating around the room. Hygiene was definitely a main concern. However, it was relieving to see that the seven resident cats left no smell or hair. It was exciting to watch the cats climb, stretch, scamper, and snooze on the elaborate jungle gym-esque structures built inside the café. The cats have free roam of the café; patrons can’t help smiling when a cat nuzzles up against their legs. This “purr-therapy” is arguably one of the best benefits of the cat café. The café, which opened on September 27, aims to be a place where cat lovers without cats can rejoice. Although many people love cats, there are many reasons for not being able to personally take care of one. At this café, many can come and enjoy the company of cats and fellow cat lovers for an hour or two. The café also serves as a unique home for the seven cats, all adopted from local shelters. On each table and in the main entrance, there is a list of the cats with photos and personality descriptions, all of which are some form of playful, loving, and sweet. They are not lying either! These cats have lots of love to give. The new Le Chat L’Heureux opened their doors for the first time this past Saturday on September 27th, shortly after North America’s first cafe, Le Café des Chats opened on Rue St. Denis in August. This innovative busi-

Photos by Charlotte Cailliarec and Jessica Farber ness design has taken our city by storm. The concept of a cat café originated in Taiwan about two decades ago. The idea quickly spread throughout Asia, namely South Korea and Japan. Clement Marty, owner of Le Chat L’Heureux, first got the idea from hearing about the Asian cat cafés. This concept is slowly progressing in Canada; Vancouver and Toronto are prepared to open ones as well. While admittedly the focus is largely on the cats, Le Chat L’Heureux does offer an extensive menu for a small café which features “punny” names such as the “Cat Puccino” and the Chat(i) Latté. Many have highly recommended the Housemade Hot Chocolate, which is much more rich and chocolate-y than your average hot chocolate (it closely resembles European “Drinking Chocolate.”). The food menu offers a variety of gourmet sandwiches, salads, and sides with gluten free and vegan options. A favourite is the Cat Lady sandwich: country bread, fig jam, honey, goat cheese, cheddar and caramelized onions. There are also several smoothies available, served in mason jars, named after their resident cats. One of the downsides to the café are the prices, as they are certainly not cheap. Expect to pay around $13 for a sandwich or salad, $4 for a hot drink, and about $7.50 for a smoothie. The reasoning behind these prices is that they include the full costs of taking care of the cats. In addition to food and cats, the café plans to offer cat and animal-based classes and events, as well as workshops with veterinarians, and zoo-therapy for the disabled according to the website. So is it worth the hype? It really depends on what you expect; seven cats isn’t enough to make the entire café “crawling” with felines, so if you’re expecting that kind of atmosphere, perhaps you may be underwhelmed. Also, the pricing may turn off the idea of being a regular at the café. However, it’s a great idea to go once and experience “purr-therapy”. It will be interesting to see how two cat cafés, just blocks apart, will coexist. Hopefully both establishments continue to attract customers and pave the way for the Cat Café trend expanding in North America.

October 2014

NEWS

“Inception” intermission To Dream or not to Dream? BY: CHELSEY JU

he concept of dreaming is still a massive question mark. Dreams are best known as thoughts, visuals and unconscious experiences that occur during sleep. Many theories have been placed forward, but it’s difficult to really pinpoint a description for the phenomena. Dream research is also difficult; as soon as a person wakes up and starts to describe their experience, it’s a report of their memory of a cognitive experience. As soon as one wakes up, the authenticity of a dream is already lost in a sense. Research has shown that dreams often occur during the rapid eye movement (REM) stage of sleep (technically can occur at anytime during sleep, but most common at REM). This stage of sleep was discovered quite recently in 1953. During this stage of sleep, your body exhibits movement similar to “fight or flight” responses; heart rate, breathing, and blood pressure increase. Also, brain activity is at a level analogous to being awake. What keeps you still, unconscious, and asleep are body chemicals released onto specific cells in your nervous system. What purpose do dreams have then? Are there any physiological, biological, or psychological benefits? Some theories have been brought up to answer these questions. Studies suggest that dreams can be a time where your brain catalogues all memories made during conscious hours. Only complex memories are kept, and some researchers believe that dreams have a complex role in organization processes. This idea of using dreams to organize and store memories into long term banks in the brain has become a popular notion. Thus, dreams help with learning and memory function. Sigmund Freud, the “father of psychoanalysis”, had a different notion. He analyzed dreams and described them as manifestations of unconscious desires and behaviours of the human mind. He splits the mind into three parts: ID: centered around basic human needs, pleasures,

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and fulfillment. EGO: rationality, morality, and self awareness of the mind. SUPEREGO: Censorship of the ID, and enforces the “code” of the EGO mind part. Using these divisions, Freud explains how irrational behavior is suppressed via the superego. Dreams are therefore an opportunity for a person to “act out”, and experience the ID’s primal desires. Since these desires can be uncomfortable to bear in consciousness, “censorship” occurs and the content is transformed. This is why you sometimes wake up with cryptic and confusing images. Struggling to remember a dream is also natural, as it is the superego doing its job, and protecting the mind from psychological disturbance. Dreams act as an interface between the unconscious repressed desires, and conscious reality of a person’s life. Following Freud’s concept, the idea of lucid dreaming (dreaming while knowing you are dreaming) seems surreal; does it mean you get to access all those “dark, hidden secrets” about yourself that you aren’t supposed to access? Lucid dreaming occurs when a dreamer experiences something bizarre, and becomes aware that they are dreaming. Slowly, perhaps with practice, a dreamer can begin to control their dream, and do whatever they desire. It’s becoming more and more popular, as many people enjoy doing whatever they want in a dream, and not having to face consequences of reality. It is unsettling to realize that we still don’t have a solid explanation for why we dream. The human mind is full of mysteries; consistently puzzling psychologists, neurologists and curious individuals lay down altogether. Perhaps one day in our lifetime we’ll understand it fully. For now, keep a dream journal if you’d like to hear radical stories of your “unconscious self ”. Or, simply just turns off the lights, shut your eyes, and enjoy the show.

Feature

All things

caffeinated

coffee techniques, and treats Tessa Battistin, Lifestyle Writer

offee plays an integral part in most student lives. Having a strong cup of coffee helps many pull through an 8:30am class, or complete a late night assignment. Personally, my addiction to coffee serves as the perfect excuse to explore coffee shops throughout the Plateau on brisk fall days. Over 90 percent of adults consume caffeine everyday. Let’s get to know this benevolent beverage better, and understand its caffeinated grip on our society. Naturally, McGill students are multi-tasking world conquerors. The McGill lifestyle allows for coffee to be inserted into your study breaks, whether its through Leacock Snax’ bargain deals, or Première Moisson’s artisan java. The recent student strife has even been prompted by coffee, as many McGillians watched their beloved Tim Hortons be replaced by Premiere Moisson’s espresso-late barista bar. Whether you like your coffee artisan brewed, steaming and flavorful, or bitter and black, sometimes you just can’t live without it. McGill just exhibits a small sample of caffeine zombies; Montreal does a great job fueling our addiction; it’s a city brimming with cafes. The coffee that we find so frequently comes here from all over the world. In 2009, the top three coffee supplying raw coffee to Canada were Columbia, Brazil, and Guatemala. The top three suppliers of roasted coffee were the USA, Italy, and interestingly enough, Switzerland. The Food

and Agriculture Organization of the United Nations, predicts that world coffee consumption will grow by 0.4% annually. This type of prediction shows that the import of foreign coffee into Canada won’t slow down in the near future, and may even become more diverse. Our coffee will continue to come mainly from Brazil and Columbia, but other popular importers are Indonesia, Mexico, and Vietnam, which all sport perfect climates for the coffee plant to grow. Coffee even grows very well in Hawaii, because volcanic soil is nutrient rich, perfect for crop production. Exotic bean locations are huge on the Montréal radar, and we will certainly be seeing a lot of foreign flavors in the future. If you’re a true McGill coffee connoisseur, you should be aware about all the hip new ways to brew your exotic Indonesian java. Pour over coffee brewing is one of the most up-and-coming ways to get your fix. It involves a pour over brewer, and a pour over brewing kettle. This type of method is basically a manual drip brew. The kettle you’re using must have a long thin spout to allow for even pouring so all of your grounds get hot water passed through them correctly. Often, coffee shops that use this method make it into a performance, setting up the brewer right in front of you so you can watch your coffee slowly distill. There are about 15 different ways to brew pour over coffee, and all of them come with interesting contraptions and methods.

October 2014

Feature If you’re fine to just use your “one cup coffee maker” for morning brews, perhaps you are more interested in making some coffee flavored recipes. Cocktail ice pops have become popular over the summer. Here’s a great Baileys cocktail ice pop recipe, for the few days left before winter. ½ cup Heavy Cream 1 ½ cups 2% Milk 3 tablespoons instant coffee 2 tablespoons whole cane sugar ½ teaspoon pure vanilla extract Pinch of sea salt 2 ounces Baileys Irish Cream Bring all ingredients (excluding Bailey’s) to a simmer in a saucepan. Stir, and remove from heat when well combines. Transfer to a container and place in the fridge for about 1 hour until cool. Remove from fridge 7 mix in the Bailey’s Irish Cream. Pour poptail mixture into pop molds. Add the stick, and Freeze overnight.

If your fancy leans towards more gooey treats, Fudgy Coffee Brownies could be a great Sunday afternoon project: 2 sticks unsalted butter 5 ounces unsweetened chocolate 2 tablespoons instant espresso powder 2 cups sugar 1 teaspoon pure vanilla extract 5 large eggs 1 cup all purpose flour 1 tablespoon cinnamon ½ teaspoon salt Preheat oven to 305 degrees F with rack in the middle. Butter and flour a 13 by 9 inch baking pan. Melt butter and chocolate with espresso powder in a 3-quart heavy saucepan over low heat, whisking until smooth. Remove from heat and cool to lukewarm. Whisk in sugar and vanilla. Whisk in eggs 1 at a time until mixture is glossy and smooth. Whisk together flour, cinnamon, and salt, then whisk into chocolate mixture. Spread batter in pan and bake until a wooden pick inserted in center comes out with crumbs adhering, 25 mins to 30 mins. Cool completely before cutting.

Here you have it - two recipes, hot and/or cold, to enjoy some coffee buzz, plus a new brewing technique for all the coffee connoisseurs out there. Happy brewing, McGill!

Want to learn more about campus news while working with an awesome team? If so, apply now to write for the News section of The Bull & Bear today! Read more details at: bullandbearmcgill.com/join/news/ bullandbearmcgill.com

Feature

Stephanie Thomas, Opinion Editor

The positing of “affirmative consent” in Senate Bill 967 marks a shift in the criminalization of sexual violence. No longer is the onus placed on the victim to prove they effectively communicated a refusal in a clear and understood manner to the other party. Instead, the bill makes it the responsibility of each individual who engages in sexual relations to acquire explicit consent from their partner(s) throughout the course of the experience. On paper, affirmative consent appears as a much needed innovation. Undoubtedly, the new legislation will make it easier to hold those who commit acts of sexual violence accountable. However, I am unconvinced that a definition change – limited only to colleges, instead of including the

larger community where “no means no” will remain the standard – will reduce the number of cases or guarantee additional protection from potential aggressors. Are we really claiming that a portion of those who violate others do so unwittingly, and will refrain from such behavior now that they have more rigid criteria to observe? Guilty parties may no longer be able to rely on feigning ignorance of refusal to defend their actions, but the debate will now err into the equally muddy waters of body language and alertness. Quite frankly, it seems the focus is misplaced unless we consider that serving justice after the fact is more important than preventing sexual aggression to begin with. Imposing rules to govern the way we engage in sexual acts only serves as a paternalistic and superficial illusion of protection while it is actually meant to increase punitive ability. After all, there’s an irony to the fact educational initiatives were omitted from the bill.

FOUR CORNERS:

DOES YES REALLY MEAN YES? Four writers presenting their honest take on California’s controversial Senate Bill 967

Ryan Ehrenworth, Opinion Writer

What is sexual assault? In an age where it is no longer clear what constitutes consensual sexual activity, California’s Senate Bill 967 further complicates the process of acquiring consent. As a result, no longer can non-verbal cues be understood to indicate consent; this applies during every sexual encounter and for every new sexual act, which must now be outlined and agreed to completely in advance.Even in the context of a stable sexual relationship, this bill rules that it is no longer correct to assume that the regularity of sex in the past is an indicator of consent in the future. While I understand the premise of the bill and its efforts to make all parties more comfortable in the most intimate of moments, I think it trivializes the true nature of sexual assault. This form of violence is a heinous act of unwanted sexual behavior which can leave a person physically, emotionally and psychologically damaged.

Schools such as the University of Michigan are beginning to label sexual violence as an act as trivial as “withholding sex and affection.” For the victims of rape, this is an outright insult. Unfortunately, this legislation fails to recognize the difficulty in determining whether consent has been granted when already engaged in sexual acts. What I don’t understand is why someone who feels uncomfortable before or during a consensual sexual encounter wouldn’t grasp the opportunity to speak up, rather than asking for a verbal contract, which some argue hinders the passionate and spontaneous nature of sex. In the absence of drugs and alcohol to hinder one’s ability, I feel the responsibility should lay with the partner who feels uncomfortable to make it clear that they do not give consent, and not vice versa. Otherwise, false claims of sexual violence such as “withholding affection” will only serve to water-down the fundamental gravity of sexual assault.

October 2014

Feature Emma Gaudio, Opinion Writer

California’s newly adopted “yes means yes” bill seems like something that will benefit university campuses in an age where sexual assault is at the forefront of discussions with friends, news articles and Facebook posts. The bill changes the age-old “no means no” rule of consent to “yes means yes” when campuses are investigating incidences of sexual violence. My biggest problem with “yes means yes” is actually in its very existence. The fact that this bill was deemed necessary in the first place is aggravating. Individuals who have faced sexual assault have chronically been treated so poorly by investigators that a state finally deciding to pass a bill that changes how consent is defined is both drastic and long-overdue, but also an unfortunate reminder of the sorry state of affairs.

That being said, it’s clear that this issue continues to be so blatantly mishandled by universities if they actually think that, by changing “no” to “yes,” their problems surrounding rape allegations will suddenly be alleviated. Maybe “yes” will be the solution to the unreported sexual assaults, the poorly investigated rape cases, or even the deplorable treatment of survivors of sexual assault. Or, then again, maybe California has inadvertently created an entirely new set of problems, thereby further exacerbating the daily nightmare faced by the victims of sexual violence. All I know is that I find it extremely troubling that, in 2014, people are being forced to redefine the pre-existing notion of consent as a last ditch effort to deal with the behaviors exhibited by those callous individuals who continue to ignore, downplay and trivialize sexual assault on campus. These are the people to whom “yes means yes” should really be aimed.

Following petitions delivered by women’s advocacy groups and sexual assault victims, California Governor Jerry Brown recently signed a bill – applicable only in colleges receiving state funding for financial aid – defining consent as an “affirmative conscious, and voluntary agreement to engage in sexual activity.” Gone are the days of “no means no,” whereby consent could only be disputed when one party actively refused to partake in a sexual act. Instead, by conversely declaring that “yes means yes,” the state is the first in the US to enact legislation explicitly asserting that a “lack of protest or resistance does not mean consent, nor does silence mean consent [nor does] the existence of a dating relationship [...] be assumed to be an indicator of consent.”

Jennifer Yoon, Opinion Writer

Senate Bill 967 may be a step in the right direction to amend our deeply insufficient and – quite frankly – damaged understanding of rape culture as a society; and it should be understood as such. However, the claim by Senator Kevin De Leon, who drew up the legislation, that this bill signals a “paradigm shift” is not only far from the truth, but it is also a dangerous assertion that can do more damage than good. The bill clarifies the culture of consent, and provides a clear-cut, agreeable definition of affirmative consent, and also places the responsibility of confirming consent

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on all who engage in sexual activities. Still, I worry about how this definition will be interpreted in the assortment of universities in California; the culture at Occidental College is radically different than the one at UC Los Angeles. So, I fear that this cookie-cutter measure will only worsen the situation through misinterpretation and/or misconstruction. It also follows that this bill may obstruct further efforts to change our understanding of rape culture: legislation does not necessarily determine culture, and in this case, we still have a far way to go in transforming our way of thinking. The views expressed in this opinion piece are the authors’ own and do not necessarily represent those of The Bull & Bear.

Feature

Hong Kong Democracy Movement Comes to McGill Students organize protest in solidarity with demonstrations in Hong Kong Ailisha Macharia, Opinion Contributer

oday at 2:00 PM, McGill students, professors, and Montreal locals alike came out to demonstrate in solidarity with the pro-democracy protests in Hong Kong. McGill Students Michael Law, Elliot Tan, and Ailisha Macharia, in cooperation with QPIRG McGill, organized a solidarity demonstration with Hong Kong outside

the McConnell Engineering building. The demonstration included keynote speakers, petition signings, and the distribution of yellow ribbons to symbolize calls for universal suffrage in Hong Kong. Tan voiced his close connection to Hong Kong. “My mother is in Hong Kong right now and she sends me updates of what is going on when she can. It has been both inspiring and eye-opening to learn from and participate in this campaign that contests Hong Kong’s political reality.” Michael Law, Tan’s co-organizer and Hong Kong native, conceptualized the local protest two days ago after realizing that no other demonstration of the kind was going on in Montreal. QPIRG reacted quickly to support the event by providing funding and logistical assistance, and by providing the organizers with contacts to invite to the event. Historical culture of student activism at McGill McGill has a remarkable history of resistance movements, particularly in the late 1960s against the Vietnam War. In November 1968, the McGill Political Science Students’ Association went on strike and all political science classes ceased abruptly for two weeks. Students gathered on Lower Field, demonstrated outside the McGill admissions building, occupied administration offices while practicing other forms of resistance.

October 2014

Feature A year later, McGill student activist Stanley Gray, Principal H. Rocke Robertson, and the Dean of Arts, H. Wood, all partook in a televised debate on the topic of the Vietnam War and concurrent student movements. The mobilization of students and faculty alike embodied the power of unity and audacity in denouncing and protesting injustice. More recently, students from all over Quebec joined in student protests against proposed tuition hikes in 2011 and 2012. Almost 50 years later, this strength in student movements and mobilization is being revived locally. There was a strong turnout at the event with students, professors, and community members in attendance to support the cause. Many in the crowd wore yellow clothing and carried umbrellas with yellow writing on it as a sign of solidarity for their counterparts in Hong Kong.

Photo via Bloomberg

for the fundamental universal suffrage they were promised 20 years earlier.

“My mother is in Hong Kong right now and she sends me updates of what is going on when she can. It has been both inspiring and eye-opening to learn from and participate in this campaign that contests Hong Kong’s political reality.” -Elliot Tan

The Beginning of a Movement In the past week, a previously unimaginable development transpired in the streets of Hong Kong: pro-democracy protesters were met with the same use of excessive force that has come to define far too many peaceful protests this year. While Ferguson recently saw its streets awash with nonviolent demonstrators demanding justice and the end to racial discrimination at the hands of law enforcement, Hong Kong’s protesters are now clamoring

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These momentous and far-reaching protests led by Hong Kongers of all types are in response to the Chinese government’s latest attempt to undermine the democratic autonomy it pledged to grant and protect in 1997. On August 31, the Chinese government declared that Hong Kong will finally be able to hold direct elections for the city-state’s top leadership position of Chief Executive in 2017. This came with a caveat, however, as Hong Kong’s citizens may only choose from a list of candidates pre-approved by a committee loyal to Beijing, a seemingly minor detail that sparked the initial protests. Law illustrates the dynamics of this political operation: “Freedom, like wealth, is not going trickle down from the top. The ongoing protests [in Hong Kong] represent a clear democratic will of the people for full democracy and the frustration towards the lack of genuine dialogue between the oligarchs in Beijing and Hong Kong’s polity,” claims Law. On September 22, a number of student-led resistance campaigns – including the Hong Kong Higher Education Student’s Association, and Scholarism led by 17-year-old Joshua Wong – began the protest by boycotting class.

Feature Since then, students have blocked major roads, barring passage for all vehicles by protesting – and even sleeping – in the streets. Subsequently, the “Occupy Central with Love and Peace” campaign mobilized even more citizens to come out to the Central Business District in support of the student movement. This counteraction of the citizenry to the undermining of their promised democratic autonomy has come to be known as the “Umbrella Revolution.” Aptly named, it pays homage to the umbrellas used by protesters to protect themselves from the tear gas and pepper spray employed by the police. Widespread Solidarity with the Protests As today marks China’s “National Day,” Hong Kong protesters are “celebrating” the founding of the People’s Republic of China by continuing their occupation of downtown streets. In a show of international solidarity, demonstrations are popping up across the globe – including today in Montreal – mobilized by the city’s diaspora across the world. The Montreal demonstration coordinators express that the goal of the demonstration was to exhibit solidarity with the pro-democracy protesters in Hong Kong, to raise awareness of Hong Kong-Chinese relations throughout Montreal, and to rejuvenate the McGill activist community by effective means of expression and the attainment of realizable goals. As students seek to travel, study and/or work in Hong Kong or China for jobs or internships, the coordinators hope this will motivate prospective expatriates to recognize the complexity of local politics and the democratic importance of the citizen’s current demands.

In the Heart of the Protests The people of Hong Kong have found inspiration in and also expressed their intersectional alliance with Ferguson by using the hashtags #HandsUpDontShoot and #Ferguson while embracing the iconic “Hands Up, Don’t Shoot” chant and gesture as a powerful signal to the local police. Intimidation tactics used against demonstrators

included pepper spray, tear gas, batons and police threatening gun usage against uncompliant civilians. The current pro-Beijing Chief Executive CY Leung warned people to immediately stop their campaign in hopes of weakening the resistance movement’s fortitude. Such loyalists and other parties with strong economic ties with the Chinese government are the main opponents of this movement nonviolently fighting for democracy, which they deem a threat to the political economic stability of both Hong Kong and China. In response, protesters have also shown incredibly strategic innovation. Many have cut up empty plastic bottles as face masks in order to protect themselves against the tear gas. Furthermore, in fear of the government shutting down or limiting cell phone and Internet usage, over 100,000 protesters have downloaded an app called FireChat which employs mesh networking to keep Hong Kong’s citizens connected. Despite the reality of government censoring in mainland China, the revolution has still managed to be trending trending topic with hashtags such as #HongKongProtests, #OccupyCentral, #UmbrellaRevolution, #hkclassboycott, just to name a few of the most popular. One of the speakers at the Montreal demonstration spoke of the importance of the citizens of a nation in an effective democracy. “I believe that as with this protest movement, as with every movement rising round the world, the most important thing to remember is that it should be the government listening to it’s the people, not the people listening to the government. People should not be afraid of their governments, governments should be afraid of their people.” The coordinators of the protest today hope to continue holding demonstrations if the situation in Hong Kong worsens or if any major developments occur and encourage those wishing to hold such an event to get in contact with the coordinators. “Solidarity means that we will stay with the protesters until the revolution is complete, if that takes years, days or seconds.” The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Bull & Bear.

October 2014

Activities Night: Still Helpful or in Need of Help? Other resources show what this event could be

naccessible as it stands, students navigating the convoluted and crowded mess that is Activities Night can’t be faulted for asking if there is a better way. But the answer is complicated. Simply put, it’s just too busy. Students – exhausted by the hours-long wait and crammed spaces reminiscent of sardine cans – want out as soon as they get in. Representatives have to talk over each other and the drone of the mob just to be heard, let alone have a meaningful conversation with those eager to become involved. Inevitably, few truly leave the encampment at Shatner satisfied or any more enlightened. At best, they take a consolation prize and – resigned – sign up for a club in the hopes that it might actually turn out to be something to fun do. This event is supposed to be a portal into campus social life and involvement, a feat it sometimes manages to accomplish. In my four years at McGill, some of the clubs and student organizations I joined on Activities Night actually became real sources of friendship and life skills. However, many others – for which I barely knew what I was signing up – ended up being nothing more than yet another listserv spamming my inbox. So, why is Activities Night still considered the best way to learn about clubs at McGill? Because there’s no alternative – or so they say. Students flock to Activities Night because there still isn’t an effective way of discovering or joining academic clubs on the Internet. Sure, you can find a list of student organizations on SSMU’s website, but gleaning further information necessitates stepping through a muddle of club Facebook pages or websites – and that’s only if you’re lucky as some groups have neither. Thankfully, there are other online paths to pursuing extracurriculars at McGill, and all are much more accessible than what we currently have – which shouldn’t be all that hard to believe seeing as pretty much anything is better than the status quo. The same SSMU responsible for both the claustrophobic Activities Night and the corresponding online club directory also runs a wonderful and affordable Mini Courses service. Though not clubs per se, these courses are a great way to meet people, and are relaxed enough for you to not feel like you’re “working” while still learning something. Registration is closed for this semester, but is

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Opinion

Sam Robinson, Opinion Writer

– refreshingly – incredibly easy and can be completed in just a few clicks on the Mini Courses website. Meetup.com is a left-field alternative outside of regular student life. As a website that allows anyone to register for or create their own groups, it has a diversity of users that student-only clubs can’t compete with. It’s a localized service and, though some of Montreal’s offerings skew more to the dating side, there are a lot of different activities offered. Registration involves a quick Facebook sign-up and allows you to browse all nearby groups and monitor upcoming events in one place. Can’t find a group for a specific interest? Just start one, it isn’t hard. Both SSMU Mini Courses and Meetup.com show what our club system could and should be. These websites offer all the resources for finding and joining a club in one simple and organized location. As a result, Activities Night is fast-becoming a relic of a slower era when people were more patient. Now, it’s simply too crowded to cater to our packed social calendars and need for instant gratification. But what these two sites also show is a point too often overlooked: as great as student clubs are, they aren’t the only way. Though clubs are the “safe” choice, they shouldn’t be the only thing you experience before leaving Montreal. Sometimes investing in unexpected lessons or venturing outside your comfort zone is an opportunity for growth that shouldn’t be missed. Many students – myself included – probably wish they had realized this as a freshman. So yes, Activities Night as it stands is a sorry mess. McGill students and their clubs would be much better served if SSMU addressed the failings of this institution, in order to restore it to its full potential as the single largest meeting-point for campus involvement. Still, this unfortunate reality should be used as a chance to diversify one’s interests with very little risk and a lot of potential gain. When planning your social life at McGill, remember that there are other things to do in Montreal that don’t take two hours to sign up for. After all, joining a club shouldn’t be harder than finding a Tinder match. The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Bull & Bear.

Opinion

Why McGill Needs Our Overlooked Musicians An ode to McGill and the musical mavens who make it home to “The Best Place on Earth” Jennifer Yoon, Opinion Writer

n honour of the tenth anniversary of Arcade Fire’s debut album Funeral, I decided to become more connected to McGill’s music scene, the same one that spawned the Grammy-winning band. And so, I found myself in an appropriately obscure artistic hub on a weeknight. One foot inside O Patro Vys, I was welcomed by Warhol-esque stencils of icons dangling on the walls: Uma Thurman sprawled out cigarette in hand, and a smouldering Mick Jagger. The band was in full swing, the venue smelled of sweat and introspection, and the ethereal lights – shrouded by a mystical fog – were pulsing to the beats. And as I stood there, glass of wine in hand, absorbing each musical outburst of emotional ecstasy, I had two epiphanies: i) I had forgotten the sheer magic of live music; ii) Most of us live in total, nonsensical oblivion to the music scene within our own, cherished bubble. Though McGill is becoming increasingly known for celebrating the oddest of achievements, our music scene is no record-breaking brownie. All the same, our university has an incredible list of alum changing the landscape of music across the globe, namely Leonard Cohen, Rufus Wainwright, Claire Boucher (aka Grimes), and Arcade Fire. But in our many eulogies for our more prominent alumni, we often forget the bands that are still kicking around and making the campus’ music scene what it is today.

Photo via Pitchfork

Arcade Fire, Funeral (2004) The show I attended featured three McGill-rooted bands: General General, Cult Classic, and Something Like Scales. To be perfectly honest, I expected

October 2014

Opinion

Photo via Gorilla vs. Bear

tial downpour and the sound may not have been perfect, musicians still cite it as one of their favourite gigs. So, why do these bands all seem to evaporate into thin air as soon as the gates of “The Best Place on Earth” close shut? Wouldn’t it be great if we could recreate some of that OAP magic during the year? We already have the perfect venue in our beloved campus watering hole, Gerts, and we certainly have the talent. The precedent of OAP makes it clear that both the musicians and student body love jamming out together; so why aren’t

Claire Boucher, aka Grimes, who actually attended McGill aggressive mediocrity in the grand tradition of college bands. However, I was absolutely blown out of the water. Our students – a good chunk of whom are not even in the music faculty – are incredibly talented and more than worthy of our praise and attendance. As we’re situated in one of the most musically creative and prolific cities on Earth, the result is a remarkably diverse, dynamic and unique conglomeration of a campus music scene. Naturally, there are obvious difficulties in grouping together all these innovative sounds and bands into a consistent community, and even bigger challenges with coming up with a way to effectively publicize their gigs. That’s why, though there are organizations like the SSMU Musicians’ Collective who have taken on the ambitious task of connecting musicians and promoting musical opportunities, much of musical buzz is spread

through word of mouth and personal connections. That being said, more could still be done to make the campus music scene more comprehensive and recognizable. OAP, for example, has successfully been uniting McGill bands and McGill students since its inception. Besides, the bands seem to absolutely adore performing there. Though there may have been torren-

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we doing it? We also have outstanding organizations that are all about putting on cool concerts catered to students. The event I checked out, A Night for Kibale, was organized by Jam for Justice, a Montreal-based organization that holds concerts to raise funds for social justice issues – both local and international. As it just opened up its McGill chapter earlier this year, the approximately hundred people who attended this show serves as a testament to how the sky really is the limit with how much this organization can thrive on our campus. There are few objections to be made about an opportunity to listen to good, local music while doing some good in the world. All this goes to show that we should really be paying more attention to our campus musicians. Not only do they deserve every bit of recognition they get, but they’re also both exceptional and invaluable to the character of McGill. Most students – certainly in Canada and probably in the world – are not exposed to the abundance of musical talent that we are on a daily basis. Therefore, we should be doing more to support these bands. After all, it’s hardly a taxing task to listen to some good music with a glass of wine in hand. The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Bull & Bear.

Opinion

Safe Space at McGill : A Card Against Humanity What needs to be done to make our “safe spaces” all the more safe Aneri Nanavaty, Opinion Writer

y vowing to combat anti-LGBT violence and discrimination, the idea of safe space is something I advocate for quite strongly, especially as a Canadian. I’ve been raised in an environment that has taught me to be tolerant of all people, regardless of their sexual orientation or gender identity. Unfortunately, the prevailing image of safe space at McGill has become an insulting mockery of what it truly stands for. As a notion rooted in social justice, safe space strives to foster “the acceptance and integration of people of all sexual orientations and gender identities.” As such, safe – or safer, as it’s also referred – space is critical in nurturing an environment of tolerance and understanding. However, despite its commendable objectives, at McGill, this principle is regrettably remembered as “that Rez Project thing” we had to sit through. It was also something we had to keep in mind at teatimes with floor fellows and when deciding on a Halloween costume. Other than that, safe space has pretty much become a joke to McGill students. Lines such as “Bro, don’t say ‘gay,’ that’s so not safe space!” or “You’re not being very safe space.” have emerged as very common sarcastic comments among students – with an emphasis on the sarcasm. As

many people I encounter seem to take this issue as more of a farce than anything else, that’s essentially what it has become. That said, you can’t blame those students – myself included – who have adopted such a “lighthearted” approach. After all, it’s simply a response to how trivialized the idea has become, through its forceful institutionalization and excessive thought-policing to the point of ridicule. After your first year living in residence, did you hear anything about safe space again? Unless you’re involved directly with SSMU, probably not. You might have heard the term tossed around here and there, but unless someone’s making a joke, there’s not much positive talk about it. Even during first year, most of us couldn’t take it seriously; the general consensus on the Rez workshops was that they were too “over the top.” The way the program is presented devalues its ideals and turns them into a joke. Case in point: the many instances it’s used incorrectly as an excuse to nit-pick on little words that could – maybe, potentially, probably not – be deemed “offensive.” A friend of mine was once in a conference where the TA started the class by asking for a simple definition. A young woman put her hand up and answered the question. The TA then proceeded to

October 2014

Opinion ask, “Does everyone agree with her definition?” Another student then interjected, saying, “I don’t appreciate how you said ‘her.’ It feels like you’re pitting the class against her. That’s not very safe space of you.” Thoroughly ruffled, the TA then proceeded to fumble an apology, while the atmosphere in the classroom could have been described as “awkward,” at best. However, the more pressing issue is the fact that safe space is not inclusive enough. It sounds ludicrous, doesn’t it? All the same, one major flaw I see with this concept is that it doesn’t even begin to address all the social justice issues we ought to be tackling. As students of an academic institution with an incredibly diverse population, our

marginalized as a result. This has the detrimental effect of making gender identity/sexual orientation the defining element of someone’s individuality, which shapes the manner by which others approach and interact with them. In constant fear of offending someone, we dehumanize an individual and socialize with them in a conditioned manner. It sounds very extreme, but this was my honest first impression of safe space. I don’t want to have to approach people while categorizing them. For me, a person is a person, and that’s exactly how they should be perceived and treated. Safe space at McGill pinpoints a particular characteristic about a person and makes that their entire identity. Someone’s

duty is to embrace and promote the fundamental value of inclusivity for all. As an LGBT movement, safe space definitely contributes to this cause. Still, it remains exactly that: a campaign that champions the rights and interests of only those in the LGBT community. Therefore, why don’t we also direct our energies towards the conscious eradication of other stigmata? Issues such as racism, sexism and mental health are rampant and relevant on campus, and must also be addressed in the foreground. I was a victim of racism in my first semester at McGill, while a peer faced sexism in their second year. In addition, mental health issues are also something that ought to be addressed, especially on a university campus that offers valuable services that tend to go unused. If Rez Project tries to confront more of these realities that many students face on a daily basis it would become far more relevant and engaging to those same students. The lack of inclusivity that has become characteristic of safe space can also be interpreted as a tendency to focus on sexuality and gender expression as the sole markers of an individual’s identity. What I’m trying to say here is that safe space doesn’t inclusively recognize the entire person; it reductively categorizes them into X, Y or Z. Students are

sexuality or their gender expression is not solely who they are; it is not a definitive characteristic. Safe space is a topic under a much bigger umbrella of issues, and we would do well to remember that. McGill should work on improving the basic idea of safe space on campus, and should also try to include awareness of many more of the issues that affect McGillians on a daily basis. A university education does not simply lie in the faculties we choose and the classrooms we sit in. It also lies in how we treat each other, view each other, and what viewpoint we carry out into the world after earning a degree. Safe space at McGill cannot continue to categorize people in such a reductive manner. Instead, it should work to replace those categories for just one: the person. While that may be the true intention of safe space, its methods at McGill paint a very different picture. So, next time I hear the words safe space, I don’t want to hear a trivialization or a joke – and that starts with every single one of us, myself included. I’d much rather hear it used as a term of respect for another individual and all their intricacies. The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Bull & Bear.

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Business

Buy High and Sell Low: An Upside-Down World How investment funds have created a new investment strategy Philippe Riche, Business Writer

here is an old joke about an economist strolling down the street with his companion. They come upon a $20 bill lying on the ground, and as the companion reaches down to pick it up, the economist says, “Don’t bother, if it were a real $20 bill, someone would have already picked it up.” This tale is a classic representation of one of the most contested beliefs in social science: the Efficient Market Hypothesis. This theory posits that consistent excess returns in financial markets are impossible. The rationale is quite simple: because there is a huge amount of market participants – who all have instant access to the same information – any mispricing is quickly exploited and arbitraged away. Led by Nobel Prize winner Robert Shiller, countless scholars have found major anomalies in the efficient market theory. Nowadays, it is almost unanimously accepted that the theory does not hold. Educated investors now favor the idea that human emotions influence the market far more than rational decision-making. In order to exploit market inefficiencies, investors have invented a wealth of new investing strategies: value, growth, GARP (a combination of value and growth), income, “behaviouralizing,” etc. Each school of thought believes it has found the best stock picking technique. However, the truth is that it has become increasingly difficult to beat the benchmarks and outperform exchangetraded funds (ETFs). A study recently published by a group of fund managers suggests many of us have missed the easiest yet most counter-intuitive investment strategy: trend-following. The authors prove that it is profitable to buy stocks when their price has appreciated, and short the ones that are declining. In other words, the study contradicts the oldest mantra in the book and defends the

absurd theory to “buy high and sell low.” This investment strategy consists of going long on assets with prices above their previous five-month average, and shorting them when they fall below their average. The results are impressive. The authors reversetested their strategy two hundred years back and showed profitable returns every single decade. Trend-following beat a classical 60/40 portfolio in every period and proved to be more profitable than buying and holding the assets based on P/E valuation. Although the results are somewhat head-scratching, there is a compelling explanation for this phenomenon. Academics like to call it the principal-agent problem. Up until the 1980s, individual investors held more than three-quarters of the world’s financial assets. Nowadays, most stocks are not held by investors themselves, rather by agents that invest it for them through asset management in mutual funds and hedge funds, for example. These big players now account for 30-40 percent of daily trading on Wall Street and consequently have a major impact on markets dynamics. The nature of their business is at the root of the trend-following phenomenon. Investors pick their fund managers based on past performance. They choose to give their hard-earned capital to “superstar managers” who have been able to consistently beat their peers and the benchmark. The massive capital outflow from Pimco – estimated at $100 billion – following the departure of the Bill “Bond King” Gross serves as a perfect example. Fund managers are highly pressured to never underperform their benchmark (e.g. S&P 500, Dow Jones Industrial Average, etc.), or else they lose their clients. The most damaging situation for them is to have an underweight position in an outperforming index stock. It causes their returns to rapidly diverge from the benchmark if they do

October 2014

Business Trend-‐Following vs. S&P 500 Returns by Decade 45%

Trend-‐Following

S&P 500 CAGR

40%

35%

30%

25%

20%

15%

10%

1903-‐1912

1913-‐1922

1923-‐1932

1933-‐1942

1943-‐1952

1953-‐1962

1963-‐1972

1973-‐1982

1983-‐1992

1993-‐2002

2003-‐2012

*Annualized Returns Source: Hurst, B., Ooi, Y. H., & Pedersen, L. H. (2012). A Century of Evidence on Trend-Following Investing. AQR Capital Management, p. 3.

not invest in the rising stock. Consequently, large fund managers are forced to allocate massive amounts of capital in financial assets with rapidly rising prices, even if they clearly appear to be overvalued. These irrational price momentums are what allowed trend-followers to pocket massive profits. Also, the large sums given to big name money managers are invested in the stocks and bonds that they favour, which are most likely those that have performed well recently. This leads to excessive price increases in their preferred assets. In addition, a growing number of investors have developed a copycat-bias – systematically replicating every move of their idolized managers. This has further contributed to irrational price and volume increases, and ultimately the high profitability of the trend-following strategy. Still, some economists argue that the perceived impact of fund managers on the market is exaggerated. For them, trend-following has been profitable because of a recent phenomenon: massive stock repurchases. Last year S&P 500 companies bought back a record-level of $500 billion of their own shares. Repurchasing increases Earnings Per Share (EPS), which has become an indication of a firm’s financial health for many uneducated investors. Academics argue that constant EPS increases have fueled sustained stock price surges, even if every valuation metric suggests a market correction. The shift in dynamics from individual to fund-dominated markets is undeniable. However, only time will tell us if the trend-following strategy can bring excess return in the long-term. You can try buying high and selling low at your own risk, but I personally wouldn’t break my piggy bank to test it just yet. Instead, next time you see a $20 bill on the floor, you better pick it up quick because it won’t be

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there for long. Also, take the time to look around, as there are most likely quite a few 20$ – or even $100 bills – lying around. Like with markets still full of bargains, you just need to dig a little.

Business

Two-In-One: Why Would Oracle Bet on a Co-CEO Structure? Shared governance in the political, corporate and McGillian environments

Maud Chiche, Business Writer

n September 18, Larry Ellison, co-founder of the database software company Oracle, announced he was stepping aside as chief executive. He revealed in the same occasion the identity of his successors – former Hewlett-Packard CEO Mark Hurd and Safra Catz, a former investment banker and long-time Oracle dealmaker. They became co-CEOs of the California based company after the announcement. Ellison will stay actively involved in the company as he embraces the positions of board chairman and chief technology officer. This is probably the first step in a long process of disengagement, mirroring Bill Gates’ renouncement to his CEO position at Microsoft 14 years ago. Shared governance is a controversial topic not only in the corporate world but also in the political environment. Some countries such as France, Finland and Russia are implementing semi-presidential systems, in which an elected president and a prime minister, responsible for the legislature, share the governance. The powers are divided between the two figures, which can trigger internal inefficiencies. Complications are often inevitable when a president and prime minister of different political views lead the country. In most cases, disagreements arising from these heterogeneous governments leave little to no room for synergy. Rather, leaders’ conflicting personalities have proven to paralyze the decision making process and divide the government into two camps. Internal power struggles drive the focus away from primary responsibilities of the organization and its leaders. This example stresses the pitfalls of shared governance in the political environment, which has proven disastrous under certain circumstances. Why would it be any different in the corporate environment? Most businesspeople are skeptical of the benefits of a

co-CEO system. During an interview on Bloomberg TV, former Hewlett-Packard CEO Carly Fiorina shared her doubts about Oracle’s new direction. “I am not a fan of co-CEO business models,” she confessed. This sentiment is widely shared and echoed throughout the corporate world – and for good reason. Oracle is not the first company to opt for a shared governance model. Citigroup’s co-CEOs structure ended in 2000 due to frequent clashes between leaders. Martha Stewart Living Omnimedia’s test run ended in 2009 after only 10 months for similar reasons. More recently, the German software company SAP’s co-CEO arrangement broke down in May as one of the CEOs stepped aside. Observations tend to show that co-CEO structures are not viable in the long run. Moreover, it is widely accepted that they do not lead to higher performance. The Journal of Business & Economic Studies investigated this claim. In 2009, it published a research paper after gathering and analyzing data on the share price of 44 companies that opted for co-CEO systems between 1993 and 2005 and comparing them to similar companies with traditional governance structures. The analysis proved there was no significant correlation between the share price of the company and the governance structure implemented. In other words, companies with two CEOs do not necessarily perform better. With performance betterment discounted as a real factor, one must also consider the consequences of the shared governance model on the corporate performance and executive compensation. Simply put, two CEOs come with two compensation packages. In the case of Oracle, we are talking big numbers, even for the technology industry. According to the Business Insider, the salary of its co-CEOs will equal US$ 37.7 million apiece for 2014. In comparison, new Microsoft CEO Satya Nadella’s over-

October 2014

Business all package will amount to US$ 18 million for this year. Even some businesspeople understanding the benefits it might have in the long run are skeptical concerning the sustainability of co-CEO structures. Jack Zenger, CEO of Zenger Folkman, agrees that the dual bosses model can help after a big change in the company such as a merger or a charismatic founder stepping down from the CEO role. However, “it seems like it raises an unnecessary set of issues that aren’t really sustainable in the long run,” he argues, especially because he believes one CEO will necessarily end up playing alpha. Despite a popular reservation towards shared governance in the business environment, some companies still believe taking on dual bosses can be beneficial to their business. According to Harvard professor Joseph L. Bower, senior executives should come from inside the company. In his book The CEO Within: Why Inside Outsiders Are the Key to Succession Planning, he describes the perfect candidate as being internal to the company, but also capable of challenging the established way of doing business.

“Despite a popular reservation towards shared governance in the business environment, some companies still believe taking on dual bosses can be beneficial to He qualifies these people as inside outsiders. “Inside Outsiders are managers who have “grown up,” professionally, at the company, who have developed an intimate understanding of its strengths and weaknesses, and who respect its culture. Yet they have also managed to remain objective about the company and skeptical of any self-serving ideology. That means they are willing and able to question the received wisdom. They are clear about the need for real change.” Bower believes a co-CEO structure can lead to this desired combination of skills. Firstly, at least one of the leaders has to come from the inside. His knowledge of the company would allow a good understanding of the business, the organization, its culture, and its people. Secondly, the CEOs have to work efficiently as a team. One of the benefits that should come from the interaction of different personalities is the ability to question the status quo, with the leaders being able to challenge the ideas of one another. Division of tasks and specialization are other benefits of shared governance. Larry Ellison assigned well-defined roles to his successors; the combination of Mark Hurd’s product oversight and Safra Catz’s legal and financial

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expertise was designed to create added value to Oracle, as their respective roles do not overlap. Moreover, the two leaders have been working together for quite a long time and their cooperation has always been productive. These combined factors reduce the risks of power struggles. Finally, an incentive for Larry Ellison to assign them both a new status in Oracle is to keep its talented managers in the company for as long as possible. One can hope Oracle’s new governance structure will end up as successful as it has been for Chipotle and Whole Foods. But as history suggests, it is more likely a transitional stage rather than the new corporate model of the company. Shared governance is more common in other environments, such as student-run clubs and organizations. For example, Desautels’ Real Estate Club was created this Fall 2014 by three management students, co-founders and co-presidents Jordan and Mark Owen and Simon Yeramian. The Owen brothers knew exactly what they wanted their club to be and so did Simon. When the three students met after finding out they all had the same interest in creating a real estate club at Desautels, each future president naturally felt invested in a specific role. “What was interesting is that Simon had ideas and we had very different ones. We became presidents of our own ideas and he became president of his.” When asked to explain the decision-making process of the co-presidency, Jordan answered, “Once we have a solid idea, we pitch it to the group. We all meet very often, we talk about our ideas, and we build on each other.” While Mark and Jordan focus on the organization of networking cocktail events and Argus seminars, Yeramian is in charge of the planning of real estate panels. However, as in every organization, leaders emerge. Jordan agrees that no matter the nature of the governance, “there is always a leader.” “In our club there is a different leader for different areas,” he adds to describe the dynamic of their shared governance. For example, Jordan admits to being the leader in getting sponsors for the club’s events. Specialization and good communication between co-presidents prevent the emergence of individual leaderships from bringing conflicts. Should a disagreement arise, the co-presidents work things out and always end up agreeing. Since they are a small group, they don’t feel the need for a strong and concentrated executive power. The only disadvantage of shared-leadership, Jordan confesses, is the lack of organization they are facing. It can be “hard to allocate work”, he explains, but this is most likely due to the fact that as a start-up, the three co-presidents had to start everything from scratch. Shared governance appears to be a great structure for young organizations and companies because co-leaders are driven by the same enthusiasm to build something tangible. In the later stages of the business life cycle, traditional governance seems to allow better organization

Business

The Beginning of East-Asian Entrepreneurship and IPO’s Why traditional ideologies may be too rigid for success in the modern world Ju Seong Lee, Business Writer

he largest ever initial public offering (IPO) did not come from the Harvard dropout working in California, nor the Stanford classmates who left Google; it came from Jack Ma, a former English teacher. The Chinese technology magnate bombarded front pages of media outlets in September when Alibaba, the company he founded, raised an astonishing US$25 billion with its IPO in the New York Stock Exchange (NYSE). The news brought to surface the already growing awareness for the need to depart from the traditional East-Asian methods of financing. Before we jump into examining the next big thing in East-Asian financing, let’s examine what an IPO is. According to Bloomberg, it is when a company offers its stock to the public for the first time. The definition leaves something to be desired, so let’s try again: an IPO is when a private company goes “public” by listing their stocks on an official exchange. Through this process, the firm proposes to raise capital for planned future investments and increase liquidity for their shareholders. I know, this sounds like a mouthful, so here’s Leonardo DiCaprio’s take on IPO in the Oscar-worthy movie of The Wolf of Wall Street : “The i- Look, I-I know you’re not following what I’m saying anyway, right? That’s-that’s okay. That doesn’t matter.” But it does matter because, through this form of financing, firms are able to raise significant capital. Furthermore, firms can achieve an unprecedented level prestige and recognition by making their shares globally available to traders. It makes investments in their, big and small, accessible all over the world. That’s like opening a seemingly endless treasure chest. Of course, it isn’t a Disney fairytale; the SEC (Securities and Exchange Commission) requires firms pursuing an IPO to disclose all relevant financial information to the public, which may unintentionally be beneficial to the firm’s competitors. There are also significant costs that should be considered, including underwriting, advertising and legal costs. Despite the drawbacks, the IPO is still

a common step for a firm to grow and enforce its market position. In Asia, things are a bit different, for reasons more complex than just the time zone difference. In general, people with East-Asian backgrounds often employ collectivist behaviors and base their identity upon their family values. Independent behavior that may disrupt the harmony of the family is strongly discouraged. Such beliefs are often manifested within the mechanisms that run their businesses. As of 2007, more 70 percent of the enterprises in Asia were family owned and operated. This statistic implies that management in Asian firms is almost entirely composed of the members or the close relatives of the family. Their offspring would be mentored and educated in the functions of the business from early on, in hopes of one day inheriting the throne. This practice successfully reduces risk as all managers are well aware of their roles, thereby fostering a deep sense of trust among staff that increases efficiency. The majority of firms take the “Zaibatsu” structure, or family-like run business. Their values align with the Japanese phrase “Genchi Genbutsu,” meaning “Go and see for yourself,” which encourages employees, regardless of their position, to value their company as a family. With the Zaibatsu mindset, companies took great caution with financing decisions and private investors were mostly preferred. As the IPO requires a full disclosure of the financial statements of the entity, it puts the company under considerable pressure from the market. Such pressure may cause firms to focus more on shortterm earnings rather than long-term growth. The EastAsian companies, whose long-term commitment values stem from the Zaibatsu principle, simply were not suited for this spotlight. The largest banks in China (which are also the biggest public companies in the world as of 2014) only became public in the latter years of 2000’s. In light of the drastic shifts of political ideologies and economic reforms, the traditional East-Asian variants of business strategy have shown weaknesses. The global

October 2014

Business expansion of investment banks has led to an increased accessibility to public financing, and those businesses that were able to capitalize on this have had a greater chance of prosperity. Businesses that relied solely on private equity found their competitive advantage challenged. The IPO boom that characterized the American market deified classical tradition. The western-educated heirs to EastAsian companies took the throne bringing with them an increased trust and faith in public financing. The stable political ground and economic prosperity recently enjoyed by the East-Asian businesses has also been a major contributor to the changing culture. Decreased risk with a fairly democratic setting, along with the reduction in information asymmetry achieved by the development of a reliable financial intermediary, has helped to establish a business atmosphere where public financing and external investment has become a legitimate option to financing businesses. Evidence of these cultural changes are ever present and exemplified by the new found sense of entrepreneurship in the continent. IPO creates opportunities for small to midsized firms to exponentially develop their wealth and to expand and grow. When this process becomes fairly unregulated, firms with limited capital will be able to benefit from public financing and become recognized in the market. As the income disparity grows in Asia, the younger generations are considering an entrepreneurial alternative to developing wealth. Young innovative companies like Weibo, Kakaotalk and Line are already dominating in their respective markets and are looking to expand into the western hemisphere. Yet, problems do exist. State-owned enterprises (SOEs) will remain under the protective wings of their respective governments. The biggest banks in China are

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still state-owned and operate under the government’s jurisdiction. The protection of domestic firms by many of the East-Asian countries may diminish opportunities for new startups and ultimately hinder innovation. IPOs are a means to satisfy the capital needs of both large and midsized firm hungry for capital in order to grow and expand domestically and globally. As a result, this protectionist mentality may lead to unfavorable regulations limiting growth for non SOEs. The extreme risk-averse behaviors displayed by the businesses is also an issue that is reflected in the fact that the total Asian IPO index remains at only 15 percent of the US IPO index. With that said, the tides appear to be changing. In early 2014, Beijing’s Security Association of China passed a set of new regulations allowing new listings on their stock exchange. With President Park Geun Hye’s “Creative Economy Initiatives,” Asia’s fourth-biggest economy, South Korea, is set to record an all-time high IPO market of 4 trillion Won – which represents a two-fold increase from 2013. These creative initiatives include direct investment into startups, modern technology research, as well as the protection of internet intellectual property. Japan’s Abenomics (named after their Prime Minister Abe) has remained dominantly supportive of IPOs, with a number set to climb after a very successful year of 2013. Indeed, there has been and will continue to be considerable doubts as to whether Alibaba will signal a new wave of successful Asian startups in US, or just a one-hit-wonder. However, as Jack Ma stated, “It doesn’t matter if I failed. At least I passed the concept on to others. Even if I don’t succeed, someone will succeed.” So look out for the descendants of the concept; the next Silicon Valley may be in the city of Hangzhou, Zhejiang Province in China.

Business

Why tapering is necessary and why the interest rate hike must happen soon Daniel Banh, Business writer

n July 30, 2014, the U.S. Federal Reserve announced that it would be further reducing its monthly bond-buying program from $35B to $25B in August and September, with a final round of purchases slated at $15B for the month of October. This action of reducing the amount of bonds purchased each month, known as tapering, first began in January of this year when the Fed reduced its monthly open market purchases (also known as QE3) to $75B from a peak of $85B. In some sense, QE3 has been a method of last resort that U.S. policy makers have used to stimulate the economy. With a heavy national debt burden, a sizable budget deficit, and calls for fiscal restraint by the Tea Party, the federal government has had its hands tied in terms of the fiscal policy options available to it in response to a sluggish U.S. economy. Moreover, with the federal funds rate already near zero, the Fed also could do little else to stimulate the economy. The Fed hoped that by buying longer-term Treasury securities and agency mortgage-backed securities from commercial banks and other private institutions, longer-term interest rates would fall in the economy, resulting in a pickup in aggregate demand, and ultimately more robust economic growth. Hence, the Fed chose to engage in an additional round of QE.

However, two years into QE3, red flags still point to persistent problems in the economy: economic growth has been sluggish, job creation has been anemic, and inflation

has been weak. As a result, there were many opponents to the tapering process. And there remain many policy makers and many on Wall Street who want the Fed to delay interest rate hikes until key economic indicators are more encouraging. But while caution and patience has been repeatedly stressed in the business press, there remain several key arguments for why interest rates must be raised sooner rather than later. The most important argument for a timely rate hike and a swift end to QE is the growing danger of asset bubbles in the U.S. and abroad. Through low interest rates and a growing money supply, the Fed created an easy money environment that ultimately induced an asset bubble in U.S. equities. Case in point, the S&P 500 Cyclically Adjusted Price-to-Earnings (CAPE) Ratio, which is a widely used valuation metric for the S&P 500, is currently over 26, while its historical mean is slightly over 16. It should be noted that since 1881, there have only been three previous periods during which the CAPE ratio was above 25: the years surrounding 1929, 1999, and 2007. For those unaware, major bear markets followed those peaks. Moreover, the low yield environment caused by the Fedâ&#x20AC;&#x2122;s policies induced investors to move further out along the risk curve towards other riskier assets (e.g. corporate bonds), ultimately causing asset inflation in other markets as well. If interest rates are kept too low for too long, there is a real danger of a hard landing for the U.S. economy due to the stock market bubble bursting; an ironic ending considering the 2007-2009 financial crisis was precipitated by similar easy money policies meant to combat anemic economic growth. Additionally, while keeping rates low may do well to maintain the economyâ&#x20AC;&#x2122;s momentum, any prolonged period of low interest rates and/or any subsequent rounds of QE can have a negative impact on business and consumer confidence. Such measures speak to pessimism among policy makers, which may very well undermine the

October 2014

Business

Figure 1. Total U.S. consumer debt, stretching back to the first quarter of 2004. economic recovery. Furthermore, while the low interest rate regime created by the Fedâ&#x20AC;&#x2122;s policies did mitigate the worst excesses of the Great Recession, what it effectively did, and has continued to do, was it removed a strong incentive for the private and public sector to deleverage their finances. By keeping rates low and pumping money into the economy through QE, debt-servicing ratios were kept low in spite of high debt ratios. As a result, the necessary deleveraging by the private and public sector has been excessively delayed. So long as balance sheets remain highly leveraged, it is hard for any sustained economic recovery to take place. In such a scenario, the debt overhang will lead to low private sector spending, low credit growth, and ultimately long-term economic stagnation. Moreover, once interest rates do begin to rise, debt-servicing costs will

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inevitably rise, which may or may not pose bankruptcy problems in the housing market, considering how high housing debt remains. Although raising interest rates will put a lot of stress into the current economic recovery, the alternative puts into play too many long-term economic problems whose repercussions will be felt for a very long time. Our best hope is that an increase in the interest rate will only cause a soft landing for the U.S. economy. Once interest rates rise, consumers will have a tougher time spending on durable goods since more of their disposable income will be spent on debt servicing. Businesses will find it harder to invest in capital goods. And homebuyers will find it more difficult to rationalize entering the housing market considering the higher costs of borrowing. The collective effect will likely hamper job creation and take much of the momentum out of the current economic recovery. However, in the long run, this painful process will precipitate a much healthier and sustainable economic recovery, while spurring economic growth on to new heights. The alternative, long-term economic stagnation, has already been witnessed from afar: Japan over the past two decades. Letâ&#x20AC;&#x2122;s hope U.S. policy makers recognize the clear danger the U.S. economy faces if they do not act decisively and swiftly. And so, we welcome Chairwoman Janet Yellen and

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