Ecunomist, Year 18, Issue 2

The Ecunomist

• Ecu-cribs • Cooking Corner • StarTales • Economic Business • Committee Page • Photopages Traders Trophy • Brenner

Official Magazine of study association ECU’92

www.ecu92.nl Reflections of a dinheirosaus

Dude, where’s my car industry?

18th year, 2nd edition February 2009

Wailing Wall

Hoeveel moet je als KPMG’er weten over MMS en podcasts? © 2008 KPMG Staffing & Facility Services B.V., een Nederlandse besloten vennootschap, is lid van het KPMG-netwerk van zelfstandige ondernemingen die verbonden zijn aan KPMG International, een Zwitserse coöperatie. Alle rechten voorbehouden.

Interesse brengt je verder bij KPMG. De technische details achter podcasting hoef je wat ons betreft niet precies te kennen. Dat je op de hoogte bent van de stormachtige ontwikkelingen op dit gebied en het ook leuk vindt om je erin te verdiepen, vinden we wel belangrijk. Want bij KPMG zou je zomaar kunnen gaan werken voor een grote telecom-speler.

Of voor een televisieproducent. Om die goed te kunnen adviseren heb je interesse nodig in de wereld waarin die klanten opereren.

En in de zaken waar ze dagelijks mee te maken hebben.

Bij KPMG geloven we dat die interesse je een betere adviseur maakt. Daarom zijn we op zoek naar mensen die breed durven kijken én denken. Die ‘streetwise’ zijn. Als je over die mentaliteit beschikt, kun je hier aan de slag als trainee (bij Audit) of junior adviseur (bij Advisory). Kijk voor meer informatie over deze functies en over onze manier van werken op www.kpmg.nl/carrieres.

AU D I T TA X A DV I S O RY

Content And Colofon

Four times a year The Ecunomist is published in a circulation of 1500 for the members, patrons, Æcunomen and external contacts of ECU'92.

Introduction From the President .....................................4 Updates Agenda .......................................................5 Educational Affairs......................................7 Features WailingWall .................................................8 Alumni Student (Harmen Peters) .................9 Work At................................................10/11 ECU Cribs ............................................14/15 Reflection..................................................16 Brenner ...............................................26/27 Economic Business An American Dream....................................6 Zebra Stripes........................................12/13 Enron ..................................................20/21 Dude, where’s my car industry? ................22 Photo’s Photopage Traders Trophy ........................28 Committee Page: The AC .....................................................25 And...

Student Abroad (Rens de Weerd) ..........18/19 StarTales ...................................................29 Cooking Corner ........................................24 Final Say ...................................................30

Published By: Studievereniging ECU'92 Janskerkhof 12 3512 BL Utrecht Tel.: 030-253 9680 E-mail: info@ecu92.nl Internet: www.ecu92.nl Printed By: Hakker van Rooijen Special Thanks To: ECU'92 Board Y.S. Brenner

Editorial Committee: Folkert van Wier Loura Vlam Jessica Krom Arjan de Hoop Rens Dautzenberg Lisanne Vermeulen Jennifer Evans Freelancers Ian Koetsier Joël Kroodsma Elena Meshcheryakova Lizzy Ansingh Juliette Kuiken Joris Hehenkamp Joey Cairo Ernst Rustenhoven

© Study Association ECU'92. The copying of articles is permitted provided that the source is stated

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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From the President

America, America Rens Dautzenberg - The central theme of this edition of the Ecunomist is America. Why? What can you say about this country? I’m sure every single one of you has a certain image of the States and that’s not different for me. Although I have never been ther, someone I’ve heard of has. You might know him yourself, his name is Marinus de Goederen and he is a singer. He studied in America for over a year before he became the singer of a band called ‘A Balladeer’ and their latest album, ‘Where are you Bambi Woods’, is more or less the soundtrack of that experience. The last track on that album is called ‘America, America’ and I wanted to share some of the lyrics with you.

“I wasn't even seventeen when I believed the grass was greener where life is one big movie scene of beauty queens and paper boy achievers (…) we prayed for soldiers in Iraq to give them strength to fire we pledged allegiance to the flag we praised our freedom caught between the borders of America, America” Of course, lyrics always have multiple interpretations and this song is no exception. So, what I’m about to write to you is not necessarily the vision of the writer of the song. When I think of America, the ‘American Dream’ pops into my head.

Every single person is able to turn from a newspaper boy into a CEO, making a couple of million bucks a year. At least, that’s the dream; but as Marco Borsato has taught us: most dreams are fake! How can the American people accept the fact that there is so much division within their own country, while their (former) president 4

cares more about bringing ‘freedom’ to other countries? Of course this is a (political) choice, and not a bad one per se. It wouldn’t be my choice, but it’s still a choice. However, I find it unacceptable that one of the wealthiest countries in the world is struggling so hard with her health system, a small percentage of the inhabitants shares all the income and the murder rates are relatively much higher in the States compared to other developed countries.

Furthermore, when I meet an American couple at dinner in Brussels and they want to explain to me, after I’ve told them I study Economics (!), how a credit card works, because they honestly think European people don’t know that, I am astonished. My point of view can be explained by cultural differences and I would like to go further into this topic, but I think I’ve had my share of this edition.

Let me kiss you off and stress that I am not an America-hater; I just don’t agree with some of their basic ideas. Maybe that is why I am fascinated by the American culture and maybe that is why we’ve chosen to do an edition on this topic. Enjoy reading this Ecunomist!

Cheers, Rens Dautzenberg

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Agenda

Agenda and Association news January 13th

Poker Tournament

January 27th

DLC Lecture on Corporate Social Responsibility

January 30th

Book sale

February 2nd & 3rd

Book sale

February 2nd

BOMB

February 10th

YER Job Application Training

February 27th

Football Tournament Masters

March 26th

Company Day: Driven by Diversity

May 28th

Annual Conference

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Economic Business

An American Dream

Joey Cairo – The United States have always been portrayed as a country in which everything is possible for those who are remarkable talents, are very smart or have great entrepeneural skills. And sometimes you don’t even need any of those things to accomplish something great. (for example: George Bush, Johnny Knoxville) This concept is known as the American Dream. There are a lot of ways to be succesful, ranging from hurting yourself for no reason and filming it, to becoming a movie- or a rockstar. In the Netherlands you can be succesful in almost just as many ways. There is one major difference: MONEY.

While in the Netherlands movies are often just cultural expressions that don’t attract a large crowd, in the States Hollywood is big business. Being a great musician in the Netherlands will get you a nice house, in the U.S.A. the same thing will get you a huge mansion with seven bathrooms. And who doesn’t want to be able to take a crap on a different toilet everyday of the week?

But probably the biggest difference between the U.S.A. and the Netherlands, or Europe for that matter, is in sports.

The most popular teamsports in the Netherlands are soccer, field hockey and volleyball. Of which soccer is by far the one in which the most money is involved.

While a soccer game attracts thousands of spectators, hockey and volleyball only attract several hundreds.

How different is the situation in the U.S.A., where sports are a huge part of the domestic economy. The national American Football (NFL), Basketball (NBA), Baseball (MLB) and Ice Hockey (NHL) leagues together generate approximately around 18,6 billion USD in revenue each year. During the respective seasons the matches attract thousands and thousands of sports fans every night, but the leagues do not only regulate the sport, they are merely huge corporations in which the focus is making big profits.

So how about the salaries? Well, let’s compare. In the Netherlands the highest wages are paid in soccer. The player that 6

makes the most money right now is Albert Luque of Ajax, who makes something about 2,5 million euros a year. The best paid athlete in the NFL is Peyton Manning with 30,5 million USD. For the MLB that is Alex Rodriguez with 35 million USD. And last but not least, the best paid NBA player is LeBron James, who earns 40,46 million USD annually. Fun fact: minimum wage in the NBA can be up to 1,4 million USD, depending on the player’s experience.

Now we’ve learned, playing a team sport in the Netherlands is definitely not the way to get that house with seven bathrooms. If you’re a soccer player you’d want to get transferred to a team in the big European leagues. England, Italy or Spain are the best way to go. Spain in particular can be quite benificial. Real Madrid’s Ruud van Nistelrooy is with an annual salary of 8 million euros the best earning Dutch soccer player. Not too shabby.

But, is he the richest of all Dutch athletes?

No, the crown belongs to a certain Andruw Jones. Player of the Los Angeles Dodgers in the MLB and earning 14,73 million USD a year. Ever heard of him?

Probably not. Heard of Ruud van Nistelrooy? You probably have.

Andruw Jones chose to take his chance at an American game, he is now living the American Dream.

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Education Affairs

One week of Educational Affairs or: getting exhausted from doing all and nothing at once Ellen Aalbers – In my opinion the tasks of the Coordinator Educational Affairs of the ECU’92 board are the most vague towards the members of ECU’92. Of course you know (or at least you should) that you can come to me with questions regarding education at USE and maybe you are also aware that I know a lot about the books we sell you every period. But what then? What are the other jobs a Coordinator Educational Affairs does? Only a few know. Reason enough for me to give you a little more insight in my daily life in the board of ECU’92.

Monday Morning. Always a bad one, getting started isn’t easy. One standard thing on Monday is our weekly board meeting.This three hour meeting with my four partners in crime needs, surprisingly enough, preparation. Reading minutes, think of the announcements you have to make and try to anticipate on the discussions that will follow from the points on the agenda.

After the board meeting, we speed ourselves to the Nieuwe Dikke Dries, to drinks some beers with Sinterklaas en Zwarte Piet. No beers for me unfortunately, I have a meeting with the Master board tomorrow, for which I still need to read some stuff. Academic people are very good at writing, which means I have to be very good at reading.

On Tuesday I get up at 7.30h to be at Janskerkhof early. A master student emailed me with some serious complaints, which I want to get in a row before the Graduate Board meeting starts. What we discussed in the meeting?

That’s one secret I’ll never tell. One of the downsides of being a Coordinator Educational Affairs is that you cannot always tell everything you are busy with.

This Wednesday the last material that I need to complete nominations for the University teacher and young-teacher awards is handed in.

Two letters of recommendation and some course evaluations, from which I need to use some conclusions in the nomination. The two documents for Piet Keizer and Kim Zwitserloot

need to be handed in 11 (!) copies, so that takes me another hour and a lot of printer ink (thank you, USE).

That evening the gala took place, on which no further commend is needed...

After the gala I got some extra sleep on Thursday. That day I have a meeting with one of the four committees I coordinate, the Freshmen committee. They’re planning an activity in week 6 of the new year. At four I have an appointment with our account manager at book subcontractor NewBricks to make the rough order, based on number of books sold last year, subscribers per course and number of orders already done in our online bookshop. To get your books in Utrecht on time, we already need to order some books far ahead.

This Friday is a very special one. It the last one before Christmas holidays. Which means all outstanding emails need to be answered and some in arrear administration (as a vice-secretary I am responsible for member administration) needs to be done. The pieces written for the USE-employee newsletter need to be in one document and sent to the communication department of USE. Also, on behalf of the bookfoundation, I am busy with getting us a cash dispender for the next booksale, via NewBricks. And a wonderful thing to end the week (and the year) with, is folding 1500 Christmas cards. That also is being a member of the board.

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Wailing Wall

VS

Onno de Jong - For someone to who once was said that he probably would not like heaven because there is nothing there to complain about, it is an honour to fill a page in our beloved magazine with just wailing. So I am delighted to discuss with you the land of the unlimited vulgarity, better known as the US of A. I mean, what country in the world could ses and reasons of the financial crisis will bring you Paris Hilton and Tila Tequila, and be tackled somewhere else in this magazithen still make money off it. Of course we ne but let me get things straight. It started Dutchies have the infamous ‘Geer&Goor’ when Americans realised that it is in perbut they are miles ahead when it comes to fect order to pay way too much for somebad taste. And yes, there is a saying in latin thing which them Yankees call ‘’Real Estate’’ that: “de gustibus non est disputandem” but in Holland would be called: ‘Extra (just Wiki it), but in the field of ‘good taste’ groot tuinhuisje, zelf te monteren’. we shouldn’t be Americas’ toy dog.

Afterwards the banks realised that they And yes, I have been there, even to the epic could not lend that much money for mortcentre of vulgarity: the Big Apple. And sure gages anymore and the market for ‘te grote I did love it. But then getting impressed is tuinhuizen’ collapsed. When you then jump a worrying thing. We might end up in an from ‘de hak op de tak’ (is there a way to ‘’Ameridutch’’ society with al the stereotysay that in English?) you get to General pes involved. Driving around in two tonnes Motors and Ford who now found an excuof plastic and steel which made the se for the lack of ability of their product Rustbelt famous to the nearest Walmart. development and marketing departments.

Could you imagine it, instead of going to The 1927 T-Ford consumed 1 litre of fuel your local supermarket on your ’granny on every 7 kilometres.The 2008 Ford F150 bike’!? And afterwards you would just drop Pick-up truck does exactly the same. Is it on your couch and watch TV all evening then the engineer to blame or is it the long. And look out fellow Dutchmen, our financial crisis that you have declining sales TV’s are getting bigger and the streets are and make record losses? In the mean time getting crowded by Calimero Kingkong there were also some troubles at instituStupid Useless Vehicles! tions called ‘banks’. Although quite some banks have a name which contains the You should ask yourself the question what word ‘rock’, they were nowhere as solid as America brought us in the last couple of it. But then, were the managers of these years. Your Ipod is in fact made in China banks forced to move out of their houses? and so is your laptop. McDonalds was alreNo they weren’t. Reports of large parties ady there and your Diet Coke is old-fashiand hunting trips to exotic destinations oned. MTV was there when the stork still and excessive salaries still come in. had to deliver you. Okay they did bring you MSN, I have to admit that. But the main So to conclude: there is something rotten thing they brought you was a financial criin the state of the USA. Does this imply sis. Yes, since we are economists, I feel I that I am anti American? No I’m not and I should mention it. would love to visit the states again!

I’m quite confident that the scientific cau8

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Alumni Student

Alumni: Harmen Peters

Lisanne Vermeulen & Folkert van Wier - We meet Harmen Peters in café ‘De Poort’. Harmen finished his bachelor economics in march 2007.

After this he started to work at Fortis. But after one year he found out that he was not yet ready for the work floor so he decided to do another study.

Something that has nothing to do with economics, namely philosophy (wijsbegeerte). Harmen is really an all-round student. Next to philosophy and economics, he is also studying law on a part-time basis. We will put him on the spot and each time let him choose between two different possibilities.

Economics or philosophy? a freshmen you feel insecure and you don’t Harmen: ‘Hmm starting of with a difficult know how everything works. I am now one...I have to choose philosophy. Because much more serious and focused then I was it appeals the most to me. It is more intera few years ago. I approach my study as esting and more critical than economics. work. I would describe myself as a senior.’

Also it is wider orientated. Why did I choose economics in the first place? It was Bike or bus? an easy choice. Good career prospects, I Harmen: ‘Bike! Except when it is raining… already knew a lot of people, and both my Definitely not bus 12 on a Monday mornbrothers studied economics.’ ing to the Uithof.

Morning or evening person?

Harmen: ‘Morning person. But that is only since my working year. Even when I have nothing to do I will get up before 10 o’clock. I love to have the whole day in front of me.’

Commission or board?

Harmen: ‘I can not really choose between those two. I have never been in de ECUboard, but I have been asked.

Unfortunately I turned them down, a decision I still regret. However I did participate in several commissions: Relaxcie, introduction-commission and the CVA.’ Beer or wine?

Harmen: ‘Beer, easy to drink!’

UCU or Uithof?

Harmen: ‘The best thing about UCU is the ECU-room. It is also nice to have everything concentrated in one building. The Uithof is very wide spread and impersonal.

So I choose UCU.’

Apples or pears?

Like a real philosopher. Harmen: ‘Well you can’t compare apples and pears, can you?

On the other hand they are both fruit.

Difficult, difficult… Then apples. A pear is hard to eat, especially when it is ripe. Then is becomes a very messy happening. Apples are just easy to eat.

Newspaper or TV-news?

Harmen: ‘Newspaper. Over the past years the news has become much more public orientated. The quality of the news has decreased a lot. They only show the news that people want to see/hear. I read the paper in the weekend, usually the NRC Handelsblad or Volkskrant.

Baked or cooked egg?

Harmen: ‘A baked egg with bacon, please!’

Freshmen or senior?

Harmen: ‘Right now I have to say senior. As The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Work At...

Arjan de Hoop - Amsterdam, heart of the Dutch financial sector. In an impressive building at the Herengracht, I meet with Ivo Braakhuis, Senior Trader at All Options. That his main job is teaching new colleagues becomes clear when he enthusiastically starts explaining the activities of All Options, the recent developments in the financial sector and option constructions, in between asking me questions about my knowledge of options…

Ivo Braakhuis studied Economics in In fact, the company is expanding to Hong Groningen. During his study he was a Kong and the U.S. Only ten years after All member of study association RISK and Options was founded, it employs 150 peoparticipated in Big Deal, the Groningen ple and is the market leader in European equivalent to the BVVK. Because of his equity derivatives. Offices are located in interest in financial markets he organized Amsterdam, Zug (Switzerland) and for RISK the ‘Dutch Banking Tour’ to Willemstad (Curacao). Ivo recalls the time Amsterdam. By that time, he never thought he started working at All Options: “About of becoming an options trader. Currently, twenty people worked here, only three of five years after joining the company he this group left during the last five years. If proudly shows his luxurious watch: “I just you like this job, it is the best job you can got this present, as a reward for five years get and most of the traders do not leave of hard work”. because they really like their job and the company.”

What exactly does an options trader?

‘With growth comes formality’ is clearly The premier goal of an options trader is not the case at All Options. As I visit the acting as a ‘market maker’, providing liquitrading room I’m amazed by the no-suits, dity to the markets. This happens by contiamicable culture. Behind multiple screens nually sending bid and ask prices to the traders are making phone calls with so calmarket. Ivo explains how risk is being led brokers, watching the incoming news, reduced: “We use both the company’s and checking their market risk. recourses as well as funding from a so called ‘clearing’. In order to meet the requireAs I take a sit ments from the clearing we have to keep a behind a desk, good track record and make sure we make bid and ask quomoney in extreme market conditions. This tes, charts, news can be done by hedging transactions with and ‘Greeks’ (risk the underlying (the shares), which reduce indicators) cross our directional risk. What results is an the three huge option position which resembles the payoff screens in front of an option strategy known as a straddle. of me. Except for Bottom line is, we buy options below and my amazed face, sell options above our theoretical prices, a stranger while always keeping the overall option coming in would position balanced.” This is also the reason possibly hold me for an option trader, for why All Options is benefitting from the the average age is only 26! financial crisis. “Extreme movements in the stock market are an ideal scenario for the Ivo tells me why teamwork is important: company. It doesn`t matter whether the “As opposed to the Trading Trophy stock market is going up or down.”

Qualifiers you deal with multiple equities 10

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Work At... in which you have to trade and maintain your position. Individually you’re not able to keep track of all the fluctuations. On top of that, you trade options, which means leverage, against professional counterparties. Changes are fast and you have to decide quickly whether trading opportunities are interesting to trade. That’s why teams deal with a certain group of assets, say for example German financials. If, due to circumstances, you have to focus on one position, your teammate can watch your back and vice versa.” According to Ivo, option trading is comparable to soccer.

“Before the match you prepare as a team, discussing different tactics and during the match you try to score as much as possible, which can only be done by efficient teamwork and by being fast. After the game it´ s time to relax and time for a drink.”

Profile of an (future) option trader What are important characteristics of an option trader? “We’re looking for people with an academic background, preferably just graduated. Although an Economics diploma isn’t required, analytic skills are very important. Furthermore, an interest in financial markets and a passion for trading or investing is preferred. Of course, you have to be able to work together. A competitive, want-to-win spirit is crucial, because you have to be better and faster than your counterparties to utilize opportunities.”

The application process is just as one might expect from an options trading company: fast. After sending your résumé and motivation letter you’re invited for a mathematics test, consisting of a geometric series and speed/precision part. If you pass the test, the next steps are two job interviews and of course a visit to the trading floor. All on the same day. Ivo remembered being called about the positive outcome while travelling home from his interview with All Options.

In the first five weeks you’re being taught about options theory and practice by Ivo. Part of the introduction is trading relatively small option positions. “Trading yourself is the best way to learn it”, says Ivo, “theory is important, but only theory is not sufficient for handling all the different aspects in real life trading.”

When finished, you join an experienced trading team. In order to master trading different equities, traders are frequently switching between sectors. Ivo‘s career proves the opportunities for Junior Traders, for within a couple of years he became a Senior Trader. Becoming Senior Trader implies coordinating a team, thus stimulating young traders, keeping oversight of all the positions the sector is trading, while also still trading yourself.

With a head full of puts, calls and straddles and in my bag a bottle of champagne (“it’s a quality brand, the CEO drinks it too!”) I headed to Utrecht. Although being a trader does look tough, it sure is an interesting job. So, whether to apply for becoming an option trader or not? Life is all about options.

All Options Postbus 11096 1001 GB Amsterdam T. +31(0)20 79 57 000 E. recruitment@alloptions.nl Information: www.alloptions.nl

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Economic Business

Zebra stripes

Elena M. - “You change your mind like a girl changes clothes” sings American artist Katy Perry, and so do the news analysts who give commentaries on job losses, the car industry bailout, financial fraud and Barack Obama…

To tell you the truth, I am confused about the REAL situation in America, because every day there is news on the financial crisis and the impact it has on US economy and how bad it all has become. Some say: “this is the worst ever”, but the news the next day appears to bring the situation below a “plinth”. Apparently America can take hits in many parts of its economy and still stand up. This is what the world likes about America and its people; they look for new ways to go and don’t give up, just like fighters.

I regularly hear people say “wait until Obama becomes the president”, as if there will be a magic spell and all will be good again. I admire the people who are seeking paths to recovery, who are looking for the Change now – at the point when the problem is still visible, in one piece and hasn’t spread over like a disease, like cholera.

Just when the US and the world were on the road to recovery after major financial downturns in the last 7 years – there came the unexpected credit crunch. In the opinion of a Deutsche Bank CEO Josef Ackermann, the financial infrastructure needs change and development in which control lies with “sophisticated market participants”. Promoting quick changes and stimulating top governments to make efficient changes is all good, but this plan is not working in reality. An ordinary citizen can sense the lack in the system of government; can see the disorder in operations and lack of thoroughness – the system that, although disliked, is turned to for help.

Someone mentioned the return to Keynesian

12

economics after the first market reactions to the crisis and bailout plan of 800 billion US Dollars: governments play a part in the commerce, no laissez faire, and this is happening in the country that opposes everything government owned!

To say more, symbolically speaking, “In God We Trust” is engraved on the dollar bill. What does this phrase say? That the US is religious, or that they believe in one Supreme Being that will put everything into order after people make a mess, and that Americans value freedom the most. This whole situation sounds like a paradox – in the state of high unemployment, falling demand for domestic and foreign goods, the increasing number of recessions around the world, and governments taking part of the burden – people are motionless, they are waiting, ‘Waiting for Godot’, who will never come.

Somehow the phrase on the dollar bill doesn’t go together with people who are portrayed as hypocritical beings, asking for help but not extending a helping hand to those in need – just like banks are acting after the first half of the bailout money. The purpose of the money was to stimulate spending among consumers, provide capital for firms and keep demand high in order to keep the economy stable. But how can an economy stabilize if its main players are acting inefficiently, and therefore lose trust and credibility in the eyes of their clients?

Therefore, the question is, how can economists predict and produce a plan for getting out of the recession in US, when actors of this economy are acting in unsupervised, hastened and unreported manner?

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Economic Business Concepts Lets go step by step in analyzing the possible road to recovery in relation to the basic economic concepts, because this is where everything begins. Scarcity drives people to seek better ways to achieve satisfaction from the goods that aren’t available to everyone. In these times people around the world sense the limited availability of money – as they lose jobs, businesses, capital in all the ways possible.

Some become unemployed, but have social security, and they cry because of the change in their status of living. Others have lost everything by investing in businesses that collapsed, or cannot develop their business because no credit is available. For a few weeks, I felt as if people came to a silence like the silence that appears before the Big Bang. People understand that unless they keep on striving for better lives, the bad times will progress. But the absence of a strategy for the future puts fear into the hearts and minds of people.

Another concept is the division between Macro and Micro economics. On the one hand, economists look for clues in the government actions (helping those who are deeply intertwined in the financial system and have to many stakeholders), Federal Reserve signals and the GDP growth – which at this moment is decreasing. On the other hand economist want to understand consumers’ and businesses’ behavior, their reaction to slowdown and the recession in the economy. With less demand for goods and services by these actors, GDP decreases.

Return of the Fighter Spirit The best way for economists to proceed is to pick a pivot point and start devising strategies – setting assumptions on the fighter’s spirit of American people who have endured many struggles (and this one needs to be the smoothest and the most fundamentally restructu-

ring). The world around us will never change if people won’t change. Unless everyone decides to be the best person they can, not even the ‘divine’ power of Obama can help USA. Homo economicus doesn’t need to exist in order for a nation to prosper, but it is essential that a human who loves himself and his environment does exist. This way when analyzing and predicting one’s behavior and choices, economists would look into ways of allocating recourses that bring stability to the most fundamental part of economy nowadays – financial industry. This will, in turn, bring the US back to a market economy. Henry Kissinger wrote that “…America needs to learn to discipline itself into a strategy of gradualism that seeks greatness in the accumulation of the attainable.” The former US Secretary of State indicates a way for America towards the new era of order and the exercising of ‘soft power’. Step by step America will become a fair actor in the world economy, and thus show that flowers can bloom from dead trees.

Life doesn’t need to be seen like a zebra, one white stripe, one - black, and in the end the dock.

- Ackerman, J. Lessons from crisis. (2008, December) The Economist: The World In 2009. 23 ed.

- Beckett, Samuel.(1954). Waiting for Godot. New York: Grove Press.

- Kissinger, Henry. An end of hubris. (2008, December). The Economist: The World In 2009. 23 ed.

- A Chinese proverb meaning, that what was weakened will regain its strength.

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Ecu-Cribs

The story behind Kapteynlaan 29

Folkert van Wier– ECU-cribs is the column in the Ecunomist where we take a look at the homes of our beloved ECU members. We are invited to have a glimpse at their rides, fridges and of course where the magic happens. And most importantly, they tell us the story behind their crib. This edition is all about the Kapteynlaan 29, an apartment in Tuindorp where Ewout is renting a room of Chay.

Fellow student Ilkko is the other roommate. If you want to show your crib to the rest of the world, please send an email to redactie@ecu92.nl!

I am Chay Mohammed (21). I am a 4th year student of the English Bachelor programme here at USE, as I am originally from England. I have lived in Groningen since ’98 and moved to Utrecht when I went to the Uni. I have been in the education-committee for 3 years already, where I represent the English bachelors. Furthermore I like to play football at Olympos in the shirt of Odysseus. I do speak Dutch, but as my English is more fluent I prefer the last.

All streetnames in Tuindorp-Oost are called after professors of the University. However, Jacobus Cornelius Kapteyn only studied here, mathematics and physics. He later became a professor at Groningen University and became famous for his research of moving objects in space.

I am Ewout Uunk (21), also a 4th years student.

I have had quiet an active ecu-life. I did the studytrip-committee, the introduction-committee and now I am the president of the educationcommittee. I am originally from Bussum, not far from Utrecht, where I still play football with my old mates. Also, my girlfriend Mélanie is around a lot, who is also an active ecu-member.

Joining us is Ilkko, a student from Finland. He is not an active ecu-member, but we will tell a lot about him in the coming interview, as he is easy to make fun of. Also his girlfriend Nelly is an active ecu-member who is also around time by time. Together with Ewout he lives here since September this year.

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“Chay is always late, because he lives in London GMT time, he is always an hour later” The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Ecu-Cribs

“When I had an Indian roommate, the house smelled like curry for a year, and I still have every spice available on the Indian market in house” Who of you is the filthiest?

Ilkka is probably the filthiest in the house, because he cleans up the least. We enjoy the luxury of a dishwasher during the year, however it is broken at the moment. Another amazing thing in the house is the dryer, and the four fridges for three persons. Also a great piece of furniture is Ilkka, who spends the most time of us on one of the three couches in the living room.

Our favourite entertainment is playing the house competition of Pro Evolution Soccer at the playstation 2.

than most women have.”

Chay: “And well Ilkka, he is waiting for us to come home from school with a nice cup of tea.

He is probably the most chilled of us three. He has this weird start-up noises in the morning, he is always doing funny things with his troth and nose for some reason. He is the one with the least hours of sleep. However, he has not gone out since he has his girlfriend, haha!”

How is the Neighbourhoud?

“Chay needs the stimulation of the female students in the law library” What are the domestic characteristics of you guys?

Chay: “Ewout is real good at sleeping. He usually goes to bed at around nine o’clock because he says he’s tired. He is also a real morning-person. He is also cheerfull and organized during the day because after he has had a shower he is fully alive and kicking. Once when we all three had an exam at nine o’clock, he used the shower for like 45 minutes. Turning on the hot water in the kitchen then usually does the trick.”

Ewout: “Chay likes sleeping as well, but then usually during the day. As he goes out the most of us three, with his football mates for example, he then comes home late and sleeps during the daytime. When he is supposed to have a fine for cycling without lights or something, he uses the tourist excuse; he claims to be here on holiday only, and then with a sweet smile he talks himself out of it.Plus he has more shoes

Ewout: The neighbourhood is fine, the centre of the city is probably ten minutes by bike or so.

Also there is an Albert Heijn and shops nearby.

And of Course there is a Gall&Gall where Chay has made some friends.”

Chay: Well, there is a primary school somewhere below my window, so these kids usually wake me up. The Neighbours are really various; from grandma’s to young couples with al sorts of backgrounds.There are some students here, but not that many. Plus my bike has never been stolen while standing up front.

What are the best times you have had?

Ewout: Well the nicest times are just having dinner with each other and then moving on to the playstation. We have quiet different eating times ( I prefer the Dutch 6 o’clock buzz). Also we like to watch footy and Top Gear together at Sunday night. I support Ajax and Chay Manchester…. *City* Chay: United!!! At Champions-League nights we watch two matches at once; one on the telly, and one streaming on the laptop. Ilkko supports Ajax. Why? Because he’s Jewish! Ewout: No! because of Jari Litmanen!

“Ewout buys shirts with a special substance, so he doesn’t have to iron them” The Ecunomist - Annual Volume 18, Edition 2 - February 2009

15

Reflection

“I don’t get it”/ „Ik begrijp het niet”

Jennifer Evans - I don’t think any of us realize how culturally-specific humor can be until we go abroad, and we try to be funny. Nothing stings quite like a blank stare after a well-timed punch line. While it may have been good joke back home, you’re not “back home,” and no one here thought it was funny.

Don’t take it personally; your audience probably doesn’t have the cultural familiarity that most of us take for granted on our home turf. But why does that make a difference? I found two examples -- one from the Americans and one from the Dutch -- to explain.

“That’s what she said.”

This phrase is a child of the ‘90s that is currently used ad nauseam on college campuses and among obnoxious young professionals in the United States (and possibly in the U-building).

On 27 August 2007, Cockulon defined “that’s what she said” as the most versatile joke on earth in The Urban Dictionary (an online guide to American slang). And “this_amazing_girly” gave the following definition and example on 10 September 2008: That’s what she said: Hilarious [sexual] innuendo that you can say for pretty much anything.

(Teacher talking about clay) Teacher- It usually hardens when exposed to air.

Student- Ha! That's what she said!

This joke was used several times in the American version of The Office, and the Wayne’s World-based Saturday Night Live skits.

This joke is not cultural in the sense that only Americans think Concept A is funny, and the only the Dutch think Concept B is funny. The difference is the degree of familiarity. For example, according to Wikipedia, the British version of “that’s what she said” is the phrase “...as the actress said to the bishop.” I understand every single one of the words used in the British sentence, but I have never heard that exact expression before in my life. If some eager Brit decided to use that phrase in the middle of our conversation, I would have no idea I was supposed to laugh.

Ziektes gebruikt als scheldwoorden/ Diseases used as curse words This phenomenon is supremely cultural. As

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hilarious as I think it is, I cannot use these phrases correctly on my own. (That, and the fact that I’ve heard people can actually find these references offensive, explains my lack of examples.) More importantly, I can’t imagine using such a reference outside of The Netherlands. I’m sure a foreigner would understand that you’re upset if you swear with the word “cancer,” but if you try to use the phrase in a humorous sense, the joke disintegrates.

However, a Dutchman can use these diseasebased expressions anywhere and at any (semi)appropriate time within his borders, and people will be familiar with the reference. Whether or not they laugh will be a conscious choice.

Why are these jokes hard to translate? Again, it’s not what the words literally mean, but something more subtle. Humor makes us feel like part of a group. There is an appeal of being one of the people who “get it” along with the connection caused by communal laughter. I have not done any scientific experiments, but I’m willing to bet you laugh a lot longer at a joke if you’re in a crowd of people who also find it funny, than if you’re laughing by yourself. It’s sort of like the bandwagon effect -- your listener is more likely to laugh if he knows that everyone else knows the joke. And if no one has heard it before? Be prepared for those blank faces.

Check these links for entertaining reads: http://www.urbandictionary.com http://en.wikipedia.org/wiki/Double_entendre http://everything2.com/node/973706 http://www.alternative-dictionaries.net/dictionary/Dutch/

ºThe Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Student Abroad

Studying in Minneapolis Rens de Weert is an alumni student of ECU’92. He started in Utrecht in 2003, and finished full bachelor degrees in both economics and law. After that he switched to the University of Tilburg for his master, and he is now studying for his master in law in Minneapolis, USA. He was active in the investment and freshman committee, he was in the company day committee and he was the chairman of the lustrum committee. For more adventures from Rens, you can check www.fansvanrens.waarbenjij.nu Rens de Weert - F. Scott Fitzgerald once wrote, “Life hasn't much to offer except youth, and I suppose for older people, the love of youth in others.” With this in mind, I embarked on my journey to study in America, to study the very foundation of America. Not football and apple pie, or baseball and hot dogs, but the legal system in America, which is essentially at the core of the American economy as well.

I came to America to study the law, and to obtain an LL.M., a Master of Law. But I will always be an economist. To become a law student in America one must first obtain a bachelor’s degree, in any subject. This includes fashion degrees, like the one Elle Woods obtained before attending Harvard Law in the film Legally Blonde, which, strangely enough, has come to be the most accurate portrayal of the study of law in America.

That’s the Way We Spell Success The elusive American Dream, “success,” generally includes something akin to 100 hour weeks, in a large metropolitan city, and a beginning salary of $100k. To attain this type of success, excellent grades are a requirement, beginning first semester of 1L year, which is what the first year of law school is called. The three years are often described as follows: scare you to death, work you to death, and bore you to death. Professors strike terror into the students through the Socratic Method. This means they call your name and expect you to answer whatever question they have just asked, without

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your volunteering to do so. They also try to call on whomever happens to be distracted at the moment. It is terrifying. As an LL.M. student I am only studying for one year, but the three year progression seems to still take place, in an accelerated manner.

My classes are graded on a curve, which means I am competing directly against my classmates for good grades. A solid effort gets you an eight, or a high grade, in the Netherlands, but in America a solid effort ensures that a person will pass their classes, but far from ensures a good grade. An “A+” is the highest grade possible here, but those are very rarely given out. An “A” is still very good, but most of the students receive “B’s.” Even though it is difficult to do extremely well, it is also difficult to fail, or receive a grade under a “C-.” While grades matter, my experiences abroad matter as well, and the opportunity costs of staying in the library are sometimes too high. In this way, I have diversified my studies, dedicating enough, but not too much time to school, and enough to the most important learning, that of life outside the school.

Baby, It’s Cold Outside I spend my days in class, my afternoons in the library, and many nights at the bar, because American law students like to drink. I attend the University of Minnesota Law School, located in Minneapolis, MN. Minneapolis is currently, and for much of the year, covered in a great white blanket of snow, accompanied by temperatures so cold the majority of the world only

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Student Abroad reads about them. My detour to this now frozen land has been a welcome escape from the impending “real world” job I know I must take after I graduate. Everything about America has been very interesting, and vastly different from the life I left in the Netherlands. It’s much colder here in the winter, and warmer in the summer. The weather right now requires a ridiculous amount of clothing to retain even the semblance of warmth during my twenty minute walk to class every day, along with the fattiest foods imaginable, especially in the form of fast food. The mid-west is known for its “meat and potatoes” types of meals. Now I know why.

When the wind-chill is forty degrees below zero, “comfort foods” become a necessity.

I did not believe I would experience much “culture shock” since I had traveled before this experience, but in America, I have. But it were my fellow LL.M. students who most shocked me though, especially those from Asia. All of the students here are so ambitious, since one cannot get into law school if they are not, but those from Asia are especially dedicated, and seem to study at least 15 hours a day. I attempted this once, but found myself much more like the Midwesterners. I can study until dinner time, and then I need to relax. Like I said, lawyers love to drink, and part of law school is preparing to be a lawyer in every sense. I want to get the full law school experience, so I join my classmates whenever possible. Only for the experience, of course.

On the Road My experiences in this country have been memorable, to say the least. As a law student, I feel like I study constantly. But somehow, between those hours in the stacks, drowning in piles of books taller than me, my eyes blurring from the blue din of my computer screen, I make time to have fun, and lots of it. I try to see America, and live America as any youth must, backpack and camera in hand. I am traveling during my stay, and have so far found this vast expanse of a continent to be more diverse than I had ever imagined. I am setting out for Stevens Point over Christmas, and then Chicago for New Years, to bring in the New Year in the only town in the mid-west that people from the coasts seem to give an eye to. In the New Year I’ll continue my journey in California.

School is terrifying and draining, and sometimes, the most interesting course of study I have ever pursued. I am still an economist at heart, but my study of the law only adds to this understanding. I have enjoyed my time in America immensely so far, but I am definitely looking forward to the spring, to warmer weather, and to the less-terrifying second semester that promises to come.When Jack Keroua, was stuck in an awkward evening on the road, he wrote, “all I wanted to do was sneak out into the night and disappear somewhere, and go and find out what everybody was doing all over the country.” I intend to do just that, as anyone must when they are in America.

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Economic Business

Ernst Rustenhoven - Financial crises are of all times and all places and they occur at different levels of the economy. In this article I will explain that what happened to the financial sector, already happened to Enron. At first hand, this seems a rather strange comparison. Why should we pay attention to a firm that gambled its way to bankruptcy when we talk about a global credit crisis? The answer is simple. The crisis development at Enron is very much comparable to the phases we see in the current credit Crunch. Besides that the reckless and unethical behavior we saw between the walls of Enron is until some extent the same as we saw and unfortunately still see at Wall Street and in the rest of the banking sector.

The Enron story starts with a merger betmore, only the accountable value was ween Houston Natural Gas and important because that was being reporInternorth. Before this merger, business ted in the books. Many deals were closed was run steadily and both companies focufor projects that would never be built. But, sed on what they always had been doing: that did not matter in the beginning becausupplying gas and energy. But when econose of the use of mark-to-market accounmies boom, people tend to think the sky is ting. Enron still made its quarterly results the limit. That’s what happened at Enron. It and when it seemed they were not, they formed a gas trading desk to sell gas via the upgraded the forecasted profit on their Houston Natural Gas network which turexisting contracts to make up for the gap. ned out to be an extremely profitable business. And so the highflyers at Enron, all To grow its business, Enron needed to youngsters from famous business schools close more deals. But for closing deals, with degrees in finance and other hot busEnron needed cash. And as you might alreiness areas, became fueled with a want for ady have noticed, a huge amount of Enron more. During the years that followed the profits were on paper but not yet realized business expanded rapidly. Enron diversi(due to the use of mark-to-market accounfied its business enormously, after fifteen ting). This meant that even though profits years, the company was present in every seemed to be skyrocketing, not much cash area they thought money could be made. actually came in to the door. How to get cash then? The answer is simple: debt. To Enron was booming. Not only employees get debt, a company has to have a good and were crazy about the company and what healthy looking balance sheet. In the beginthey were doing, investors were as well. ning this wasn’t really a problem, but as the And as with Enron’s business expansion, its amount of debt piled up on the Enron stock price climbed to unimaginable balance sheet it became harder and harder heights. Enormous deals were made, for to find extra debt. But, where for other which senior executives got extraordinary companies too much debt became a probonuses. But, as the stock price climbed, blem to handle with Enron found its way the view of senior executives became out of the debt problem by the use of clemore and more focused on it. The stock ver accounting techniques, again. Andy price became transformed as the single Fastow, who climbed the Enron career ladperformance measure within the company. der at dazzling speed was a financial Real value of projects did not matter anymastermind. He used financial engineering 20

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Economic Business

to create off balance sheet vehicles that carried Enron’s debt. How did he do this?

He created special purpose entities (SPE’s, normally used to isolate firms from financial risks) in order to hide losses and fabricate earnings. Enron found itself able to attract more and more debt, hiding losses and keeping debt of its balance sheet. So it could expand its business, temporarily.

As we all know, debt should deliver higher returns as the cost of it to be economically efficient. At Enron there was no real substance in its business. And as real profits did not arrive, the company filed for chapter 11 bankruptcy, leaving a debt behind of 27 billion dollar!!! Enron over diversified its business activities, lied to investors about the true value of its assets and took risks unimaginable at the cost of its shareholders. Enron became the tragic symbol of how free market economies can lead to greed and exploitation by a few at the top.

Where is the analogy with the credit crisis then, you might think. Well, the pattern we saw emerging at Enron is quite similar as we have seen during the credit crunch. In the beginning, everything seemed stable, steady growth was present and business opportunities looked fine. In turn, this leads to over optimism. Suddenly people start to think that everything can be transformed into gold and that money is available on the streets. New business opportunities are discovered and risk-taking increases. Besides that, the deal focused business of Enron fueled extraordinary bonuses which increased risk taking behavior even more. If one only has to close a deal to be granted a bonus, why would one care about total realization of the project? It leads to reckless behavior, just like we have seen on Wall Street. Financial engineering, used at Enron, became a tool to hide losses from balance sheets just like securitiza-

tion was used in financial markets to hide products without value.

At Enron, panic started in the beginning of the new millennium. Quarter results weren’t reached anymore, investors started doubting the credit worthiness of Enron and so the amount cash started to dry up and the stock price started its way from $90 to zero. In the credit crunch we have seen panic selling and the absence of trust being very important factors in the fall of several companies. If trust is gone, top management can do whatever it want but almost nothing helps to regain it. The same story goes for Enron. Top management couldn’t save Enron from its downfall, just like happened at many financial institutions during the credit crunch.

What did the financial world not learn from Enron? The use of SPE’s and financial engineering is very dangerous as this can hide losses from balance sheets and therefore create a wrong image of the financial health of banks and financial institutions.

Extraordinary bonuses lead to unethical and reckless risk taking behavior companies should want to be involved with. Of course there are major differences between the credit crisis and Enron, like the accounting fraud which was not necessarily present during the credit crisis. But, as I have tried to show, the stages a firm passes before getting trouble are very similar as those for a whole economy , just like the behavior and mistakes that are made.

Unfortunately Enron did not get to the last phase the credit crunch will reach: recovery.

Note: for a more in-depth understanding and broader description of what happened at Enron I advise reading: The Smartest Guys In The Room, by Bethany McLean and Peter Elkind.

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

21

Economic Business

Dude, where’s my car industry?

Ian Koetsier -The American car industry lies in ruins. The top executives of the ‘Big Three’ were begging in front of the Congress for some money until the new president takes office. But why should he give them the money?

The American car industry has not changed much compared to the time of Henry Ford. In 1910 he introduced the assembly line production technique, it is still there. However, in Ford's time there was no Toyota. This company continued to innovate and make more fuel efficient cars. Now it destroys its American rivals. The ‘Big Three’ have a domestic market share of 47% in 2008, the lowest ever. In the last year all the American car companies made major losses bringing them to the edge of collapse.

America sees itself as the leader and protector of the ‘free-market’ principles. Now it is time to show this is indeed the case. If they support their car industry, the principle of fair international competition lies in ruins right beside the US car industry. The moment to let them fail in the middle of a financial crisis is probably not the best timing. The ‘Big Three’ employ 240,000 workers and further there are 2,3 million related jobs. However not all three are equally likely to fail; GM seems to be the first in line.

Further, only when the times are tough and the need is high, a change of direction can be made.

A new direction towards more environmentally-friendly car companies can emerge. The best example for such a radical change is Finland.The country was in a big slump, but in only a decade the country transformed into the most competitive economy in the world.

In the Netherlands, the government tried to save the Dutch airplane company, Fokker. In 1996, the company eventually failed although the Dutch government put in millions and millions of euros to save it. The company disappeared, but some profitable former Fokker activities still exist. Fokker Services even won a prestigious airplane industry award in 2005, and the Aerospace division made parts of the International Space Station. The failure of the company did not seem to hurt the Dutch economy. More competitive industries seem to have emerged and prevailed instead of the persistence of the loss-making Fokker.

The million dollar question remains: Can we let the ‘Big Three’ fail? It takes courage to let them fail. In the short term the loss of jobs will hurt the US economy; however, in the long term the failure will benefit the economy. Changing direction towards cleaner technology can give the US a new ‘sustainable’ competitive advantage.

Obama seems to be the man who can do it. He has four years to turn this into his favour. His answer has to be: Yes, we can!

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The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Carrière Contact

Workshops Stages Business Courses Ken jij Carrière Contact? In het derde of vierde jaar van je studie wordt het tijd om een blik op de toekomst te werpen. Wat wil je ná je studie? Een mooie baan bij een interessant bedrijf is meestal wel een aantrekkelijk vooruitzicht. Hoe kom je aan die mooie baan en hoe weet je welk bedrijf bij jou past? Carrière Contact helpt jou hierbij!

Als landelijke intermediair heeft Carrière Contact het doel studenten en bedrijven op een gerichte wijze met elkaar in contact te brengen.

Oriëntatie op de arbeidsmarkt kan via een aantal wegen vorm krijgen. Zo is er bijvoorbeeld een scala aan oriënterende stages, business courses, inhousedagen en workshops, die door bedrijven georganiseerd worden.

Om er zeker van te zijn dat je niets mist kun jij je geheel gratis inschrijven bij Carrière Contact. Aan de hand van je specifieke interesseprofiel kunnen we je dan gerichte informatie geven.

Let wel; bedrijven krijgen geen inzage in je adresgegevens waardoor je privacy gewaarborgd blijft.

Daarnaast geeft Carrière Contact tweemaal per jaar het Carrière Contact magazine uit en onderhoudt zij de Carrière Contact internetsite. Deze media bieden eveneens een breed scala aan carrièregerelateerde informatie die je verder kunnen helpen bij je zoektocht naar die mooie baan bij dat interessante bedrijf.

Inschrijven kan op twee manieren: Surf naar www.carrierecontact.nl of ga langs bij één van de deelnemende verenigingen.

De voordelen op een rijtje: • Gerichte informatie op basis van je persoonlijke interesseprofiel; • Toegang tot bedrijfsprofielen van een groot aantal gerenommeerde bedrijven; • Toegang tot je persoonlijke gegevens op www.carrierecontact.nl; • Zorgvuldige omgang met je persoonlijke gegevens.

CarriereContact

nl

Cooking Corner

Steak tartare with mixed beans On request of some people, this Ecunomist’s recipe contains meat.

Meat is very healthy, provided you don’t eat too much of it. It contains iron, which among other things prevents anaemia (for the Dutch “bloedarmoede” ). Besides, you can use this steak tartare to impress your parents with your cooking skills when they come over for dinner. What more reasons do you need? Let’s get started!

Needed 5 table spoons of olive oil, extra vierge 2 steaks tartare 1 sachet “boontjesmix” or mixed beans (250 g, Albert Heijn) 2 slices of bread (either white or brown) 1 small red onion, sliced in rings 1 can kidney beans (200 g) 1 table spoon of lemon juice 1 sachet fresh basil (15 g) What to do Take a pan and 2 table spoons of olive oil.

Heat the oil in the pan and bake the steaks on moderate fire until they are done. Fill another pan with water and cook the mixed beans in it for about 5 minutes until they are almost done. Toast the bread (in your toaster!) and cut the slices in half, sandwich style. Rinse the kidney beans and cook them along with their friends the mixed beans for 1 minute. Poor off the beans and mix them with the onion rings, the lemon juice and the remaining 3 table 24

spoons of oil. Add a little salt and pepper.

Tear or cut the basil in pieces and spread them out over the beans. Serve the beans with the steak and the toast.

Bon appétit!

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Committee Page

The AC The Activities Committee of ECU’92 is the most popular committee of all. Between the economists in spé, we are perfect, desirable and very famous! At least… in our world.

For those of you who wants to get an autograph or photo of one of the committee members after reading this article, we hope to talk to you in the board room.

First, let me introduce the committee. With a treasure hunt in the woods, a weekend to Limburg, an upcoming poker tournament and a Buitex we have entertained you in the past and we will entertain you in the future.

The committee chairman, Mark Smienk, is the oldest one but unfortunately not the smartest.

Poker, beer and soccer are his ingredients for the perfect cocktail. And he is also photogenic, this is a reason to laugh with him!

Following the hierarchic order in the activity committee, the next person is Jessica Vizzarri, she is the secretary. This half-Italian girl from Limburg makes her a girl you will remember.

Although she is a freshman, during the ACWiekent to Limburg she won the poker tournament. And why this is worth telling you?

Because it was the first time in the history of the AC poker tournaments that a girl has won!

Then there is Thomas Maas, the treasurer. This young god from Groningen knows how to entertain a group and how to keep up the good spirit. Next to his job as the very annoying guy that wants your money, he is also a very dedicated handy man with a special preference for plumbing! And believe it or not, that will become in handy some times for us…

knows how to play with cards. But be aware of the fact that she is quiet good at it. So do not think that you can beat her like that, I learned it from own experience! The Dutch name for the game is `hartenjagen´ .

The next guy needs a different introduction. He is sometimes very aggressive, and because he is so strong (black belt explains a lot), sometimes very frightening (black belt explains a lot). He organized this years AC Wiekent to Wellerlooi and was absolutely phenomenal during the treasure hunting. Of course I’m talking about Jip de Ridder. A real sick genius!

The last part of the committee consist of Robin Coops and myself. We organise together the foreign excursion, aka Buitex. This year we will go to London! The 13th and 14th of March 2009, this committee will be in London and hopefully with you! Robin is our athlete and has run some miles for this committee during the treasure hunt and in Wellerlooi. And if you need attributes for an activity, he’s your man!

At last but not at least I have to introduce myself, sometimes I can be very unfeminine and very enthusiastic. I really like the work I do for this committee. We are a strange bunch of individuals. Diversity makes strong in this case. We do the things with a lot of fun and we really want to make the activities for everybody worthwhile joining in. Some great activities are coming up, so hopefully we will welcome you at one of them!

On behalf of the Activities Committee, Carolien Hoogeland

Jessica Krom is responsible for the promotion during this year for our activities. So, you can expect some funny and really creative ways of promoting from us. This creative brain also

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Brenner

Dinheirosaurus

Reflections of a: Y. S. Benner - My neighbour wanted to know if I could explain to him something he read that morning in de Volkskrant. Although I did not know what it was, I said: ‘Yes. We can!’ He smiled. ‘So, they got a black man into the White House.’ ‘Indeed. They did.’ His smile broadened. ‘Next thing they’ll get somebody like you to advise them what to do about the economic crisis’.

I laughed. ‘No they can’t. I’m not available. With winter coming I’m too busy feeding the birds and squirrels in our garden.’ He nodded his head in agreement. ‘Yes. This is more important. But here is what I want you to tell me.’

He unfolded the newspaper he had with him and indicated a passage on the front page.

I looked at the paper. It was de Volkskrant of Friday November 7 2008. What he indicated was a news item saying that only by raising expenditure can the recession be a little tamed, and that the largest European economies, those of Germany, France and the United Kingdom, were already busy with such ‘Keynesian plans’.

So I went on: ‘They realised that their trust in the self-correcting forces of Free Enterprise is, to say the least, exaggerated.

They finally had to admit that to get our economies back on track state intervention is unavoidable.’

Keynesian plans?’

I tried to be brief. ‘Economists believe that investment is the key to employment and economic growth. They all agree that once money is invested it turns into incomes for those who become employed through it.

The employed then have money to spend and that this is not the end of the story.

The money they spend creates other peoples’ incomes who will also spend the better part of their earnings and save some. So the process continues until the share that is saved by each subsequent group of earners adds up to the sum of the initial investment and therre is no more money left to change hands, or when all factors of production are employed. In short, investment generates earnings.

Money changes hands. Incomes and expenditure increases, and the increased expenditure encourages entrepreneurs to invest more, and so the process goes on until everyone is happy. Economists call this earning, spending, saving and investing process the multiplier.’

My answer did not satisfy him. ‘Can’t you be more specific? What do they mean by

My neighbour thought for a while. Then he agreed that it made sense, but wondered

I asked what he wanted to know? ‘What I want to know is what they mean by Keynesian plans?’I told him that what the paper says is that some European leaders found themselves obliged to shed some of their ideological dogmas and abandon some of the ruling economic theories and metaphysical assumptions.

He looked at me expecting to hear more.

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The Ecunomist - Annual Volume 18, Edition 2 - February 2009

Brenner why anyone should invest during a recession. ‘Unless someone would bring me a staggering completely new invention, like it happened with the first automobile, or with the computer, I would never make a new investment when sales are falling.

When I invest I hope to gain a good return – I want to make a profit. I have market research done to make sure that what I plan to produce has a market and will sell.

In a recession I don’t even need a market research to warn me off. I don’t invest my money to produce things people cannot buy.’

‘Well, that’s exactly the point. In a small economic downturn, which economists call the trade or business cycle, interest rates and the prices of materials tend to fall. Therefore prospective investors are usually tempted to take advantage of the low costs to invest before interest-rates and input prices rise again. But in a longlasting recession or in a depression they lose hope for a quick recovery and there is little to induce them to invest.’

Again my neighbour nodded in agreement.

‘That’s all clear. But what I want to know is where does Mr. Keynes come into all this?’

‘Mr John Maynard Keynes just stated the obvious. If private enterprise is unwilling to invest

because earnings are insufficient to generate effective demand for goods and services, the state must take the initiative. The state does not depend on short-term profit. It can invest and create employments opportunities without this particular type of expectations. It can create effective demand and a growing demand for goods and services will encourage private enterprise to follow suit because there will be demand and a chance to make a profit – economists call this the acceleration principle.’

A wry smile crossed my neighbour’s face.

‘And whence will the state take the money to pay for all this? In a recession tax returns are also falling?’

‘It can borrow. During a recession there is little investment and low employment and interest-rates are low. Under such conditions capitalists are often happy to lend their idle funds to the state even if returns are small. Then, later, when the economy recovers and tax revenues increase again, the state will have little difficulty settling the account and capitalists will be happy to get rid of their low earning government debentures.’

My neighbour grinned. ‘So, if all is as simple as you say, why hasn’t President Bush adopted Mr Keynes’ ideas? Why hasn’t he asked you to come to America and tell him how to save us from depression?’

I laughed. ‘It’s like with the birds and the squirrels. If one believes that the Good Lord with his invisible hand puts everything in place without human intervention, then one doesn’t need to feed the birds and squirrels in the winter.

Bilthoven: November 2008 Y.S. Brenner

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Photopage: Traders Trophy

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The Ecunomist - Annual Volume 18, Edition 2 - February 2009

StarTales

Aries (March 21 – April 20) - O no, the exams are coming!

Don’t panic, you know better than that. The Aries is brave, strong and doesn’t give in easily, so show the world what you’re made of! You can still make it, but you will have to try.

Remember: everyone has a hard time learning for the exams just after Christmas vacation...

Taurus (April 21 – May 21) - For you, no stress in the study area. Actually, there is no stress in any area, and that’s because your in love! (And if you’re not, you will be soon, so be prepared.) Just wear those pink sunglasses and enjoy the butterflies in your belly, but please, don’t say those three words, not yet! You will risk scaring him or her away, and that’s the last thing you want to do, right?

Gemini (May 22 – June 21) - The Gemini is known for being everybody’s friend, and gets along with quite everyone. But you should remember who your real friends are, the ones who help you when you’re in trouble, the one’s who offer you their bed when you forgot the key to your house.

Don’t neglect them, because they are the most valuable thing you’ll ever have.

Cancer (June 22 – July 22) - Someone is working on your nerves lately, and it’s almost becoming too much for you. There is a big chance it’s your noisy neighbour, who either has his girlfriend over or refuses to turn the volume of his speakers down to a harmless-to-the-ears level late at night. Don’t you sit there, annoyed on your couch, but do something about it! Take revenge, bang on the walls at 5 a.m. in the morning!

Leo (July 23 – August 21) - Thursday night, the plan is to go out with your friends, drink beers, have fun... First a quick stop at the ATM, because your wallet’s empty. But what’s this?! There’s no money left on your account! Leo, maybe you should party a little less or work a little more. Workless Leos, go search for a job! Nothing in this life is for free!

Virgo (August 22 – September 23) - Come on Virgo, gain a little more self confidence. When you look into the mirror, for one time just focus on your good parts instead of on your bad parts. Turn on that song from James Blunt (or C. Aguilera) and just admit it, you’re beautiful.

Libra (September 24 – October 23) - Oh my god, it’s almost Valentine’s Day! What shall I do?

What shall I do? We have only one answer for you, and it’s the only answer that is right: Overcome

your fears and just send him or her a card, a rose, at least something romantic and Valentiny. Success almost 100% guaranteed.

Scorpio (October 24 – November 22) Scorpio, you are such an unpredictable person. All your life ‘til now you have been very occupied with yourself and now all the sudden your in to charity! Taking dirty street cats to your home, helping old people cross the street and giving money to the flute playing woman at the central station! Weird...

Sagittarius (november 23 – December 22) - No one likes losing, especially not when it comes to a game of poker where all the buy-ins added up to a nice amount of munney. But maybe you should consider playing a little less. It will do your mood ánd your wallet a big favor!

Capricorn (December 23 – January 20) - We sense that Capricorns risk forgetting something very important. Your best friend’s birthday? A dentist appointment? Valentine’s Day for the third year in a row (to your better half’s big irritation)? From now on, you’d better check your agenda every day, or bad things will happen.

Aquarius (January 21 – February 19) This week will be your lucky week. You will find money on the street, the very hot girl/ boy next door will look at you in a way that will make you blush, and your mother will bake you your favourite meal when you get home. And that’s not all: Happy Birthday (in advance or afterwards) Pisces (February 20 – March 20) - You are a dreamer and you live in your own world. (At least, thats what the astrology books say.) But try to be a little more down to earth, you’ll need it. Try and picture yourself as a cute little fish in an ocean full of sharks. It’s a big bad world and you have to stay sharp to survive!

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

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Final Say

Economics is *not* a science (!)

Joë l Kroodsma - In these times of ongoing credit crises, a seemingly endless stream of bad business news, the upcoming recession possibly turning into depression, people often ask about my thoughts on these unsettling matters. The questions range from ‘oh, how do you think this whole mess started?’ to ‘tell me: is everything going to be alright?!’ and more and more often I avoid the issue with “I don’t know” or a simple shoulder shrug and a change of subject. Because I really don’t know. And none of the big names – Krugman, Mankiw, Blanchard, etc. – know either. Oh there are stories, ranging from “greedy bankers” to “loose lending standards for minorities” to “the Chinese did it”. But no one really knows.

Therefore I would like to take this opportunity to cast doubt on the idea that the study of the economy is somehow scientific. I’ve heard the claim “but economics is not a science” a million times before – and I guess some of you have also once or twice – but just recently begun to agree.

Several reasons. Starting from a definition of science “the organized effort of explaining phenomena”, the current economic crisis – which is partially also a crisis of economics – says enough. Also, hanging out at the faculty of sciences the last couple of months I realize that students of economics are in general not scientist material.

Myself included. I’m fascinated by science but I’m no scientist. But most importantly, I believe that the economic-social-political condition is far too complex to be captured by graphs and simple models. Or even by +2000 equation Computable General Equilibrium models which have no analytical solution.

Thus I would like to see a switch in economics. Not so much in academia – because I still think that increasing mathematical sophistication is positive for the ‘science’ – more in the minds of students, teachers and practitioners. Economics does not and shall never have first and final explanations of economic phenomena, very unlike chemistry or physics. Economics is more like social philosophy or even law: a collection of highly normative statements concerning the social reality we find ourselves in. Even though I claim economic laws are, in contrast to natural laws, normative, I mean 30

not to say that they are not true or that their truthfulness is not defined. Within a utilitarian conception of fellow humans, statements as ‘monopoly is inefficient’ or ‘taxes raise price’ could be true and probably are. However the economic laws are contingent on how far or near people are to homo economicus. Thus they are not really laws at all.

Instead the ‘laws’ describe and proscribe general tendencies of human behavior, tendencies which are contingent on technologies, institutions and beliefs. Thus far the standard institutionalist/Austrian critique on neoclassical economics. What I wish to say is that this does not invalidate the behavioral rules and equilibrium conditions derived under the assumption of the perfectly rational and foresighted actor.

Instead the ‘laws’ have different degrees of ‘truthness’ at different times and different places. The practitioner – whether in business, government or media – should 1) know and understand as many of these relative truths are possible 2) have the tools to determine their relative truthfulness in any business or government situation and 3) communicate convincingly to the layman which truths apply.

At least I plan to be such a practitioner of economics. The mathematician and physicist know several things very well (namely solving a th-order polynomial, how to make the Change of Variables or Taylor’s Theorem) but the economist knows many things (in a slightly superficial way).

Have a productive 2009.

The Ecunomist - Annual Volume 18, Edition 2 - February 2009

((4 + 3)² + 4) / 1/4 = - - 11 + 6³ = - - -

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576 + 11 x 3² = - - 196 = - -

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