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
Five 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 Æcu...................................................................7 Features WailingWall........................................................8 Rebo Symposium..............................................9 Work At... ...................................................10/11 ECU Cribs ..................................................14/15 Brenner ......................................................26/27 Crime Somalia is Dutch........................................12/13 Inside Information ......................................18/19 Photo’s Photopage Alcmaecufeest ..............................17 Photopage Company Day...............................22 Photopage Buitex London..........................28/29 Committee Pages: Conference Committee ...................................16 BvvK................................................................25
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 Joë l Kroodsma Elena Meshcheryakova Juliette Kuiken Joris Hehenkamp
And... Rebo Symposium 2009.....................................9 Student Abroad (Armina Ajkicic) ................20/21 A day in the life of a board member ...............23 Cooking Corner...............................................24 StarTales .........................................................30 Final Say .........................................................31
©Study Association ECU'92. The copying of articles is permitted provided that the source is stated
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
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From the President
Rens Dautzenberg - For the fourth edition of the Ecunomist this year we have chosen the theme of crime. Crime is a phenomenon that occurs everywhere and at any time and anybody can be brought into temptation. Like last time I will use some lyrics to make clear what I mean. This time it’s up to British metal band Judas Priest with their classic song Breaking the Law: “There I was completely wasting, out of work and down all inside it's so frustrating as I drift from town to town feel as though nobody cares if I live or die so I might as well begin to put some action in my life (…) So much for the golden future, I can't even start I've had every promise broken, there's anger in my heart you don't know what it's like, you don't have a clue if you did you'd find yourselves doing the same thing too Breaking the law, breaking the law” What is it that makes someone commit a crime? According to this song you could explain it by looking at someone’s background. The person in the lyrics seems completely lost, alone, homeless and out of money. Breaking the law becomes a necessity for him to survive. In countries with a high rate of income inequality, crime rates seem significantly higher than in countries with low inequality. In America for instance, a country with high income inequality, crime is characterized by high levels of violence and homicide compared to other developed countries. Of course, it is not scientifically justified to say that high income inequality leads to high crime rates wit4
hout further substantiating evidence. Still, I think this is at least one of the major reasons. Back to the lyrics; what fascinates me most of all is the last sentence of the second chorus. The writings basically says everybody will break the law if they will find themselves in a bad situation. This seems reasonable, but there are a lot of people saying they will never steal or hurt someone. It’s against the law, religions disapprove of it and everybody says stealing is bad. But when I try to place myself in another position it suddenly becomes more understandable why people steal or commit a crime. How can you say to a little, homeless boy who steals an apple from a supermarket he is not supposed to do that; he is trying to survive… Just to avoid any misinterpretation: what I’m talking about is an aspect of crime and not the whole thing. I will never say raping a little kid is understandable or fraud at a large extent is a good thing. My major point is that trying to tackle crime is not tackling the essence of the problem; you have to think of other things too, like fighting poverty and inequality. Enjoy this Ecunomist! Cheers, Rens Dautzenberg President of the Board 2008-2009
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Agenda
Agenda and Association news
May 12th
Sports tournament Activities Committee
May 13th
REBO Symposium: The Internet
May 13th
REBO Party
May 25th
BODEM
May 28th
Annual Conference: (Ir-)rationality of Risk
June 9th
Consultancy Day
June 10th
ECU’92 & Storm debate on sustainable entrepreneurship
June 17th
General Meeting
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Aecu
Dear Æcunomen, Robin Bode - It has been a while since my last post within this magnificent piece of paper called the Ecunomist. We are now more then half way through the year and the summer holiday is closing at a fast pace and so is the end of my board year. Unfortunately all the activities for Alumni, and thus Æcunomen, have already taken place! At the beginning of the year we had the pub quiz where various teams competed against each other to be the winner of the first Alumni pub quiz. The teams answered pub questions in the hopes of winning a grand prize! Hopefully this event will be repeated in the future, maybe we can start a tradition? Or perhaps it is better to organize different activities every year. Who knows? If you have some feedback or ideas, feel free to let me know! The second activity was of course the annual Alumni Cabaret. My humble apologies for the starting time, some of you could not make it to the cabaret at this hour. We had difficulties finding a good location so this was our last resort. Yet again apologies. The night itself however proved to be a lot of fun. Two great comedians, Alex Ploeg and Rayen Panday, and the location was beautiful-soft relaxing couches instead of hard wooden benches and do not forget the popcorn! Afterwards some more Alumni showed up at the drink, thanks for that!! Next to this, two Alumni committee members have left us, Jouke Donselaar has left to Sweden for his master and Armina Ajkicic has left to Rome for a year (her report is also published in this edition of the Ecunomist). So this means we miss a few mem-
bers. If you know any people interested, do not hesitate to contact me! Alumni can also take place in this committee, which is even better! If you only want to write articles for the Alumni newsletter then that is also one of the possibilities. USE has also appointed an alumni coordinator so they will probably soon start with their alumni program. Hopefully this will be in cooperation with ECU’92. The new alumni coordinator is Diana English and can be reached at: D.M.M.English@uu.nl. Hopefully the people who where present at the activities enjoyed it and we hope to see you again next year! Also, keep an eye out for the next edition of the Alumni newsletter! Last but not least, if you want to keep supporting us you can sign up to become an Æcunoom and you will keep receiving the Ecunomist and the Alumni newsletter. To become a Æcunoom all you have to do is to send an e-mail to our secretary at secretaris@ecu92.nl. With joyful greetings, Robin Bode Info at: penningmeester@ecu92.nl
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Wailing Wall
Wilders & The Provo’s Matthijs Zijlmans - What’s a crime? Or better, what’s a criminal? It could be that the term is reserved for those who can be prosecuted by law. If this is the case then one of the most amusing criminals to arise lately is our country’s famous blonde. I’m talking about Geert Wilders. For “seeding hate” around a religion the Public Prosecuter has decided to prosecute the controversial politician. I was quite pleased when I first heard of this, thinking that the man gets what he deserves for abusing his position in the name of ignorance. What I didn’t see then is that, for a lot of people, the issue has made this atrocious figure into some kind symbol for this country’s democracy, and it’s valued freedom of speech. Facism and National Socialism are also forbidden by law ever since Jan Maat and his party were excluded from politics, so it’s not really new. What does bother me is the fact that the man gets attention. By giving the man airplay he is taken way more seriously then he ever should be. When he went to England to promote his movie, Fitna, a whole bunch of (20?) reporters went with him! His movie failed, his ideas are flawed and there is not a scientist that even takes notice of his theory, but the media ate-him-up! At some point most sensible people saw that he is mostly just a gimmick, stupid enough to have the wrong ideas but smart enough to make alot of people listen to him. Then why is he not just ignored? We could’ve just laughed a bit, and leave him be to eventually disappear. Something that comes to mind here are unspeakable acts of heroism taking place in Holland in the late 50’s. I’m talking about a group of inspirational students calling themselves the Provo’s. A protest movement different in that they were nonviolent...something that frustrated the police greatly. They were brilliant in their actions. They went from protest banners, to banners saying things like “World Peace”, to blank banners to spreading white bicycles around Amsterdam that everyone could use for free.
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All were sequentially forbidden and everytime the movement acted a few people were beaten up by the police, which made them gain popularity. They mocked authority and law enforcement, and the law hated them and hunted them like dogs, while they actually weren’t doing anything wrong. Being ignored, the movement would’ve died a quiet death, but by calling them the scum of the earth the Provo’s got the attention to feed on, and probably a few laughs because they made the police look silly. These two stories are two perfect examples of the dangers of law enforcement. Instead of thinking about a situation, and doing the logical thing, issues that are not in direct allignment with the law are instantly punished. Instead of ignored or excluded, Wilders is prosecuted. Instead of embraced, the Provo’s were hunted down. And while the first will be forgotten in a few years, the latter made Holland famous, paving the way for important movements and social changes all over the world during the 1960’s. Finally, as a good example of what I’ve been talking about, I urge all to watch the documentary “Man on Wire” (see www.manonwire.com ). It shows the “artistic crime of the century”, and one of the greatest acts in human history...
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ReboSyposium
Rebo Symposium 2009 Arne Brouwers - Young modern people, like you and me, can do anything on the
internet. Socialize, study, listen to music, play poker and watch Hollywood movies, or dirty ones. Along the way we became extremely experienced and familiar with internet, but what do we know about the supervision? It wouldn’t surprise you that internet generates a lot of complications. Think about intellectual property (music for instance), theft, abuse of power, or racism. Like these problems need supervision when they occur anywhere else, they need supervision when they occur on the internet.
On this topic, the REBO-faculty organizes a symposium this year. This is especially interesting because, as you might know, REBO includes law, economics and governance. These three sciences have a great overlap when it comes to internet, though there are still three different perspectives. Law looks at conflicts that arise on internet, for instance about property rights. Governance will discuss the role of the government and public organizations. We, as economists, are interested in efficiency gains and rise of markets (online shopping or advertisement). As you see these things are closely tied together. For example, two competitors on the advertisement market may get into a legal conflict. Or, efficiency gains needs to be managed by public organizations. Another thing that the sciences have in common, is that they are dealing with (governmental) supervision.
We start with two general speakers, after that four separate workshop take place, for which you can sign up. Finally we have a general discussion. We will conclude with a drink together, where you’ll have the chance to chat with the speakers. That night, REBO organizes a party as well for the ones who are not tired yet. As you see, all ingredients for an informative, but also sociable day are in stock. This symposium on supervision on the internet will take place at the USBO building in Utrecht on the 13th of may 2009 from 13:00 till 17:00. Unfortunately for foreign students the language spoken will be Dutch, though, if you are fine with listening to Dutch speakers you are welcome. See you there!
The symposium will provide you with a perfect mix of the three disciplines. Therefore speakers from totally different sectors will be present: a law firm, an internet company and public organizations like Stiching Brein (don’t worry, they will not check on your laptops) and the OPTA.
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Work at...
The NMA
Jennifer Evans- Maartje Oijevaar, a former ECU'92 chairman, has had only one thing on her mind since she graduated from USE: making markets work. That is the mission and motto of the Nederlandse Mededingingsautoriteit (NMa), the Dutch competition authority. What started as a student assistantship for Maartje has become four years of monitoring activities on competition in the financial sector regulation, research experience in energy regulation and cartel investigations. The NMa is an “autonomous administrative agency with independent enforcement authority,” which investigates, monitors and reports on the state of competition in The Netherlands. Its tasks are outlined in several statutes, including the Competition Act, the Electricity Act 1998, the Gas Act, the Passenger Transport Act 2000, the Railway Act and the Aviation Act. The three main departments within the NMa are the Competition Department, Office of Energy Regulation and Office of Transport Regulation. The NMa investigates potential violations of the Competition Act acting on tips from the public received via their information line, through regular market analysis and the data that are submitted to them f.e. from financial institutions or energy and transportation companies. The NMa's three main focal points in fostering healthy competition include a prohibition on cartels, investigation of abuses of dominant (market) position, and merger control. Within the Nma, there is room for employees to find the section that most interests them. When Maartje started at the NMa, she worked in the Office of Energy Regulation on a half-year monitoring study of the energy market. From 2004 onwards, she worked with a research group focused on regulation within the financial sector as part of the Competition Department. The particular research topic was tariffs charged
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to small- and medium-sized enterprises (SMEs) per PIN machine use (that is, per swipe). Since 2007, her work focused on cartel investigation in the financial sector, specifically price fixing agreements between banks for interest rates charged to SMEs for bank overdrafts. Maartje sees a difference between her financial sector work within the research group and the cartel investigation. The end product of the research group “is like a master's thesis,” she said. There is an emphasis on empirical analysis and precise fact-finding. The research done for the cartel investigation is more practical, especially in the first phase. During that time, investigators increase their knowledge of the market and product under scrutiny. They work with police and information specialists—brainstorming about the case and sharing information. Investigators perform a market analysis, and talk to market parties. The goal of the first investigation phase is bringing all the information learned together, deciding what the next steps should be, or whether any action needs to be taken at all. Once the first phase is complete, the investigation moves to a second phase of gathering economic data, analyzing email traffic and analyzing company files during inspections within firms. Market analysis is a critical aspect of the work within the NMa. Maartje stresses that
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Work at... understanding your market segment is very important; otherwise, it would be difficult to notice something unusual. The NMa uses several tools in market analysis, including the Structure-Conduct-Performance (SCP) Paradigm. While market analysis is important, ensuring that all end products (including NMa research and investigation outcomes) are of the highest quality is paramount. If the NMa publishes something untrue about a company as a result of a sloppy investigation, that company can bring legal action against them. With that in mind, there are checks and balances in place to guarantee all NMa publications are up to standard. The NMa office offers high job responsibility within a young atmosphere (most employees are between 25 and 40). Generally, NMa employees work on 2-3 projects at a time—one large project balanced with one or two smaller projects. For interested employees, there are international possibilities within the NMa as well. The NMa is part of the European Competition Network (ECN), which was established to allow “competition authorities to pool their experience and identify best practices”. Periodic travel to Brussels for meetings is
required for NMa ambassadors to the ECN. Also colleagues of the Energy Regulator meet often in Brussels to talk about the European Integration of energy sectors. If protecting fair competition and “making markets work” is your passion (and you're a Dutch speaker), contact solliciteren@nmanet.nl or check http://www.nmanet.nl for Nma job openings. If you're not quite ready to apply as full-time employee, but want to learn more, internships are always a possibility. Interested students should contact Annetje Oomen (A.A.M.Oomen@nmanet.nl) for more information. In addition, possibilities of internships will soon be posted on the website. The minimum internship duration is 8 weeks. There is also a Nma Masterclass (Focus on Energy Regulation) on May 14th. You can register for the class until May 1st. Keep in mind, a student assistant's or intern's position within the Nma depends heavily on a student's own initiative and interests. You never know – maybe your internship could turn into long-term love affair with free markets as well.
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Crime
Somalia is Dutch Ian koetsier - The international community is angered by the piracy in the Gulf of Aden. In this particular stretch of water are more pirate attacks than anywhere in the world. The Dutch politicians send in a frigate to fight this unacceptable practice. But do the Dutch have the right to be angry? Did we forget our own history? In the 1560s, Dutch, French and English vessels sailed across the Atlantic, and not so much later in the Indian and Pacific Ocean. It comes as no surprise that these nations all have relatively rough coastal waters. This is one of the reasons why shipbuilding was at a qualitatively high level. The process of continuing discovery was fuelled by the development of the longrange armed sailing ships. Be aware, that there was no clear distinction between warships and merchant vessels. In the 1560s the Revolt of the Netherlands started as a result of discontent with the Spanish rule. Philip II tried to suppress the religious unrest in the Netherlands after 1566. Quickly all the ports and shipyards of the Netherlands were nearly all in the hands of the Protestants. A local rebellion by Dutch Protestants against the Spanish rule evolved in a world wide war. At sea, Dutch privateers attacked the Spanish vessels which supplied the Spanish troops in the Netherlands. These privateers were given an official status by the Admiralty of the United Provinces. They were pirates with a certificate of the Dutch authorities. But not only routes that where close to the Netherlands were their work terrain also in West Africa and the Caribbean they were active. It were not only privateers that invested 12
in these kind of activities, also merchants financed such expeditions. The great merchants of Amsterdam and London invested in new trading and plundering expeditions set out from northwest Europe to secure their share of the potential profits. When there were profit opportunities, the merchants seized them. By 1640 threequarters of the goods in Spanish ports were delivered in Dutch ships. Also the Dutch marine vessels took part in the acts of piracy. In 1628, Piet Hein seized the Spanish silver fleet. With the revenue from this act, the Dutch financed a new military campaign. Dutch maritime expeditions also struck at Brazil, Angola, and Ceylon, adding to global character of the war between the Spanish. After eighty years of fighting Spain was still fighting a lost war. The Spanish empire was unable to crush the Netherlands, either by sea or by land. In 1648, Spain suddenly made peace with the Republic and recognized its full independence. This was not in the least part the result of the Dutch piracy campaign. In the Netherlands these pirates are still seen as heroes. Piet Hein for example got his own song in 1844. Every Dutch student knows this song, the end goes in the following way: “Hij heeft gewonnen de Zilveren Vloot, die heeft gewonnen, gewonnen de Zilveren Vloot, die heeft gewonnen
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Crime de Zilver Vloot.� But in the modern times Piet Hein his acts would be seen as piracy. What is the difference with Somalia nowadays? Since 1992, there is no effective government in Somalia. The country is in many reports qualified as a failed state. But in the 1500s the Netherlands could be seen in the same way. A country that is subject to an internal struggle, where a Spaniard tried to establish order. Spain was in that time a leading nation, respected in the international establishment. Somalia is also a war torn country characterized by internal struggle. Here America tried to intervene, the leading nation at that time. Just like Spain, they were defeated by seemingly weaker opposition. The geographical location of Somalia is also an important factor. Just like the North Sea boosted Dutch shipbuilding and the Dutch ships were more able to sustain, the rough seas. One of the most important trade routes passes through the Gulf of Aden. It is the main sea route between Europe and Asia, after the construction of the Suez Canal. The opportunities for pirates are countless, every day numerous ships pass by. These ships provide countless opportunities, for people with a not well-defined future. As economists, it must be clear that opportunity costs of these pirates are lower in all other options.
also able to adapt their strategy against the Spanish, for example the capture of the Silver Fleet was a coordinated action. The Spanish were hurt in two ways, the Dutch got more resources and Spanish lost their hardly needed funds. Not only in the Netherlands pirates are seen as heroes, in Somalia this is also the case. They spend their money in the local shops. They are the only people who have economic power in their regions. One of their main successes was the capture of the Sirius Star, a 329 metre long oil tanker. The oil in that tanker was worth 300 million dollar, the pirates got a ransom of an estimated 4 million dollar. These funds shall and will be all spend locally, thus boosting local employment. It was a Dutch tradition to bring ships with them. For example when Michiel de Ruyter famously directed his fleet to Chatham up the Thames River and captured the English flagship the Royal Charles. The Netherlands and Somalia look like they are in different worlds. Somalia is the Netherlands but only five hundred years back. And how can we judge them now, if we know where we came from. We emerged as an independent nation, and not in the least part because of piracy. So is piracy a crime? Maybe we have to think again.
At the moment there is the task force of Chinese and European frigates that patrols the waters around Somalia. But again the pirates were able to adapt their strategy. Now they operate from a mother ship, increasing the radius in which they operate. The Dutch were The Ecunomist - Annual Volume 18, Edition 4 - May 2009
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ECUcribs
Rijnlaan 171bis B Lisanne Vermeulen & Loura Vlam - When entering the crib at Rijnlaan 171 bis B, a smell of methanol and burned meat reaches our noses. Apparently Malte, Niels and friends are celebrating the beginning of the spring! Unfortunately their other roommate, Gerrit, is not present. He felt like playing darts and drinking lots of beer tonight. Let’s find out if there are some good stories hidden beneath the big piles of delicious kip sate and marshmallows… But first of all let us introduce these guys. The person on the left on the picture above is Malte. This economics student is quite busy finishing his master and you might also have seen him as a teacher in our economics building recently. In the middle of the picture you see Niels, who is currently a third year economics student. He hopes to finish his bachelor next year. On the right of the picture you have Gerrit, he is also a third year economics student. All three roommates can frequently be spotted in the ECU-rooms where they hang out and grab a cup of coffee. And maybe you can remember Niels and Gerrit from the intro-week last year? They were the famous ballerina’s and we have to admit that they looked quite nice in their skirts...
and things are pretty clean and cosy... Of course it is a bit a mess but what do you expect else with about 20 people having a bbq and a party in your house? We decided to stay for a while too and enjoy the party (and marshmallows) while asking Niels and Malte some serious questions.
We have to admit that we were prepared for the worse when paying a visit at this crib. But things aren’t as bad as expected, it is a pleasant apartment 14
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
ECUcribs Niels: ‘The German guy smells!’ king
Looks like a successful party! Do you guys like to have a party here? Well not every week, but from time to time we do. Sociability is a top priority in this crib! When we just moved here we had a karaoke party. We had a great time! For like 10 minutes… Then the neighbour showed up because he wasn’t very pleased with our singing skills. And also during the introduction week 2008 when a few people stayed here the neighbor had some inconvenience from our door bell which rang more then once during the night.. But we bought him a pie the week after and since then we are tolerating each other.
with the representatives from DirectWonen. We had a really nice chat and eventually ended up with the signing the contract! Three guys in one apartment, no irritations or competition between you all? No, absolutely not! We are just really good friends. Besides that we are all very relaxed and don’t get annoyed very quickly. Even though Niels’s clothing is lying all around the house and Malte opens a new bag of chips while another is already open. We go out together, eat together, watch a movie. We only sleep in our own rooms, but besides that we are always together in the living room. We just feel like one
Gerrit: ‘I found a German!’ (When Malte appears from the toilet..) The theme of this edition is crime. You already told us you are guilty of noise nuisance...any other crime you have to confess? Overall we are very sweet and lovely boys but sometimes it just goes wrong. Like Malte, today he got a ticket for parking without paying. So yeah, maybe we are not as sweet as we look…
happy family! One happy family, eh? Does that also mean that you do the housekeeping together? Haha housekeeping? That sounds like something creepy that you must avoid… We do cook together. Well… we through the fries in the deep fryer! Or when we really want to have a fancy
How did you end up in this crib? We were all kicked out of our previous cribs or were staying in people's living rooms, so it was time to find something new. So we decided to search for something for the three of us. We responded to this crib via DirectWonen. During the open house meeting we talked a lot with the owner instead of talThe Ecunomist - Annual Volume 18, Edition 4 - May 2009
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Committee page
Conference Committee
This year’s conference is, of course, organised by the ECU'92 Conference Committee. This committee consists of (from left to right on the picture below) Marlous de Kubber (Secretary), Steven Broere (Coordinator Content of the day and debate), Wouter Vincken (Chairman & Coordinator Speakers), Stephanie Otto (Coordinator Location & Promotion) and Matthijs Zijlmans (Coordinator Companies). One name is still missing, and of course we can not forget this name, Douwe van der Meijden. He is not only supervising our committee, but at the same time he fulfills the function of treasurer. Together, we make up a mixed group of economics students. We range from a freshman to third year students,
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from Dutchies to non-Dutchies, and we are students from the English as well as from the Dutch Bachelor Programme. Despite these differences, we have worked together as a team in the past months to organise this year’s conference: “(Ir)rationality of risks – to win without risk is to triumph without glory” (Corneille, 1636) The conference has several components and is very interactive: there will be speakers, workshops and it will end with a debate. Next to these serious aspects, there will also be a nice lunch provided and drinks to end the day, which will give you the opportunity to talk to your fellow students and representatives from the present companies.
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Photopage Almaecufeest
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
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Crime
Inside Information
Arjan de Hoop – The 1987 classic Wall Street shows the life of a young stock broker, Bud Fox. While trying to strike some big clients he approaches Gordon Gekko, an investment banker and the personification of greed. Mr. Gekko is a raider, he’s buying up cheap companies, liquidating them and making big bucks doing that. However unethical, there’s nothing criminal to it according to the law. Gekko does some illegal things however, he’s betting on sure things. Fox is desperately searching for big clients. Not an easy job, considering everybody on The Street is doing the same. Fox is attracted by ‘Gekko the Great’ and starts to do things for Gekko he shouldn’t be doing. He gets to spy on important businessmen and retrieve confidential information from a lawyer. Nothing illegal about that either. What is illegal is using this information, which isn’t known to the public, to profit from it. When Fox finds out about a merger, he buys a bunch of call options and sends the info to his friends and a newspaper. The reporter from this newspaper calls his friends, gives them the tip and publishes the story next day. The result is a sharp rising stock price and a big gain for Fox and Gekko. One would expect this lucrative business takes place on a large scale. A call option means a small investment and big leverage, so you could make a couple of times your money in a few weeks or even days. And it shouldn’t be that hard to get the info when you’re in the financial world and you’ve got the right connections. When you find something out about a merger or other important news you give a taste to your friends and vice versa. But how could you possibly know about it? Well, there’s employees, accountants, lawyers, Merger&Acquisition professionals and investment bankers who could know about it. It wouldn’t be smart for them to trade themselves, so they might tip someone else and get a handsome reward in turn. An article by Keown and Pinkerton (1981) proves there are abnormal returns in the period before the announcements of mer-
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gers. In Merger Announcements and Insider Trading Activity: An Empirical Investigation they studied the stock price movements of 194 acquired companies from 1975 till 1978. The figure shows the abnormal price movements before the announcements. Within the last month the price starts to rise drastically. With respect to 120 days before the announcement it has an abnormal performance of 13%. Thus of a total abnormal result of a merger of 27%, almost half is already reflected in the stock price on the date prior to the announcement. Of the last 27 days only one day has a negative abnormal return. The increase accelerates during the last week, in which the trading volume is also significantly higher. The volume is on average 247% higher than the average volume three months before. So Keown and Pinkerton conclude that impending merger announcements are poorly held secrets on The Street. The possibility of the acquiring firm snapping up shares is overlooked here. Typically an acquiring firm buys a stake in the target company before it launches a bid, which could result in a rising stock price. The problem is the disclosure regulation from the SEC. Positions of 10% in a company should be reported before the tenth of the following month. Because the acquirer doesn’t want the public to know of the coming announcement, they will only raise their position above 10% in the last 40 days or even less, depending on the announcement date. This corresponds to the abnormal rise of the stock price in the last 40 days, so this could
The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Crime explain the rising stock price and dismiss Keown et al.’s theory about inside information. In my view it is only part of the solution. On the last five days the upward trend of the stock price accelerates. Keown et al. explain it by pointing at the number of people involved. At the start of the negotiations only few people know about it. Later on, lawyers, investment bankers, pr-people and secretaries are needed. The chance of leakage starts to rise, along with the stock price. So, next to inside information, the buying of the acquirer may cause the rising stock price. But what about justice? Are these unfair activities being investigated by the SEC and AFM? Yes, they are, as Bud Fox finds out the hard way. He’s arrested and punished. In real life, conviction of suspected traders is much tougher. Telephone records or emails can serve as evidence, but conversations can’t be tracked down. Consider the case of Cor Boonstra, former CEO of Philips. In 2000 he bought shares of Endemol for 1,1 million guilders. Surprisingly the company received a tender offer just a week later. His source? Might have been his girlfriend, who was director of Endemol and knew about the acquisition. Looks like a clear case of trading on inside information, but there was no proof for his knowledge of the offer. As long as there’s no formal evidence and the suspect doesn’t admit, conviction is difficult. Maybe the suspect just believes in technical analysis and followed the upward trend. Or he speculated on a takeover, which isn’t illegal. In the case of ABN Amro, one could have anticipated a takeover after the infamous letter by TCI. Although the risk of getting caught is small, trading on inside information hurts
your reputation if you’re a civil servant. Minister De Gucht, Belgian minister of Foreign Affairs, knew about the fire sale of the Dutch Fortis activities to the Dutch government beforehand. Shortly before the sale his wife and possibly some friends sold all their shares of Fortis. The media picked this up and seriously damaged his reputation. Even if we account for the buying of acquiring companies, the sharply accelerating stock price in the last days will for a large extend be due to trading on inside information. This was not just the case for the period of the study of Keown et al., but recent Dutch takeovers were almost certainly anticipated by some traders. Numico, Hagemeyer, Vedior, Rodamco and Exact, all had large stock price increases on large volume just before the announcements. The opportunity of large profits and little risk of being caught is irresistible for a lot of people. Authorities should do something about the regulations regarding inside trading. Just raising fines is not enough, the probability of being caught should rise.
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Student Abroad Armina Ajkicic - On the 16th of February 2009, me and about 16 other students moved to Rome for the Business minor of the bachelor programme to study at a private university called LUISS for a year. I was basically the only one that has never been to Italy, let alone Rome. So I was quite curious as to what I should expect. The day we arrived, my fellow housemates and me had an appointment to sign the contract for our apartment. We were dropped off by some shady looking maffiosi in a shuttle bus but the sight of our university was quite amazing. I was an ancient looking campus and it had columns (which always do the trick when trying to awe people) and students on Vespa’s were riding in and out. Unfortunately we were early for our appointment and when trying to ask the doormen where we were supposed to be we learned five important lessons: 1. They do not speak English, at all. 2. No, they do not feel like calling the person you need. 3. One should not stand in the way when teachers are trying to get inside the gate with their Audi’s. 4. They are armed. 5. They do not speak English, at all. When we finally managed to find out where we were supposed to be, it turned out the place participates in siestas. So after already starting to hate everything about Italy, after “only 5 more minutes” became 10, after “10 more minutes” became 45 minutes, 20
after hauling with a total of 150 kg of luggage for an entire day and waiting for people to finish their breaks, we could finally crash in our apartment. Finally I thought, this is the year I become a real student with a lousy apartment and having to share a bathroom with 12 other people. I was wrong. The four of us actually have two bathrooms, a dishwasher and double beds. Yeah, I know, life’s tough! Though I’m still traumatised by the amount of times we went to IKEA the first couple of days, each of us with two giant stuffed bags, by bus. Then a few days later we decided to take a walk in one of the largest parks of Rome, the Villa Ada. For whoever is used to Dutch parks, believe me, THOSE are not parks. We though to enter the park ‘somewhere on the side of the west wall’, we ended up walking about 3 km while still not having entered the park. We ended up at the north of the park and finally found a way in, not knowing however that this was just a road. So after almost being ran off the road a couple of times we sort of managed to find some benches while having walked about 3 km more. But in any case I am still convinced that the translation for ‘Villa’ is ‘Jungle’.
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Student Abroad After spending two and a half weeks walking through town and doing basically nothing, because someone thought it necessary we should arrive long before classes actually started, we were finally supposed to begin what we came here for. Well, most of us anyway. The building itself is located on a mini campus and is one of the more beautiful LUISS buildings, with of course more armed guards that absolutely NEED to check your ID everyday before you even set foot near the building. But besides that, LUISS has its own TV- and radio station, a canteen with everything from pasta to French fries, its own shuttle taxi, several sports teams, a bookstore and a pool that is under construction. O and the director of the school also happens to be the president of FIAT. Yeah, I know life keeps on being tough!
But when you look at the teachers, one big plus is that they are very flexible. If you show them your schedule and everyone else in class agrees, you can just shifts the hours around. Because noone likes having class at 8.30 in the morning, right? Another very striking thing is the manner in which they care about their appearance. They do not leave their Prada and Louis Vuitton bags at home and if they decided to wear shoes with heals of 9 cm that day, they will just lecture while sitting down. And if of course, there are no teachers left that speak English, LUISS will fly one out every week from London.
Here we have four courses in about 1.5 times a USE period all given in lecture style, so we were not quite used to that When I was asked to write something many lectures. What I’ve really noticed about my experiences here in Rome I here is that they adore the books being thought that there was not much to used for the courses. While at USE, write after only two months. I guess I some books are not even used and can was wrong. Italy is a fascinating counreally be considered as a waste of try and Rome is a beautiful city, for at money, here they use definitions, comleast as long as your view isn’t blocked ments, criticisms and even direct fromby 25 buses stuck in traffic. It will still the-book slides. I am afraid the exams take some getting used to, but I think will include a lot of definitions and learwe have all made the right choice in ning by heart. About the exams, you can coming to Rome for a part of our actually retake it two times, sometimes Bachelor. even more. Also, word got around that if teachers get sick of seeing you again or Arrivederci! if you bother them about being on holiday the date of the retake, they just give you a passing grade. The Ecunomist - Annual Volume 18, Edition 4 - May 2009 21
Photopage: Company Day
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The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Being A Board member
A day in the life… of a board member
Rens Dautzenberg -You wake up at 1 pm and take a look outside: the sun is shining. You get up, get dressed and walk to the little bakery around the corner to get a nice croissant for breakfast. Then your phone rings… It’s a friend to ask you to go with him to the Wilhelmina park to enjoy the sun for a while. Half an hour later you are lying in the sun, drinking some freshly squeezed orange juice. Quite a picture isn’t it?
Meanwhile, in room 1.21 of the U-building at University College Utrecht me, myself and I are working in the ECU’92 room. Planning the last details of the study trip to Riga and Tallinn, working on the long term policy of the association and writing this little masterpiece for our beloved Ecunomist. For me there’s no enjoying the sun and my only chance on freshly squeezed orange juice is when Douwe will make this for me (but when will that be?!). What I’m trying to make clear is that being on the board of an association like ECU’92 sometimes asks for sacrifices. Do I feel bad making this sacrifices? Well, no! Being on the board of ECU’92 has brought me so much in terms of friendships, orientation on the future, self awareness and judgement of human nature that I am surprised that not everybody is doing it. On the other hand, I would not be half as special as I am now when everybody else í s going to do it… Serious, it is a great thing that a team of youngsters like us can get the opportunity to share responsibility for running an association with 1100 members and 600 alumni. What could be a better way to orientate yourself on the labor market than to run a business for a year, because I think doing a board year for ECU’92 is not that different from running your own company. Doing your studies is a good way to gather information about
how to do it in theory, but doing a board year is a way to test these theories in practice and actually use and adopt them in real life. Take for example the long term policy we are working on right now. You’re basically creating a vision for the association for the next five years and you get to think about the way things are going now and where that came from. Where should the focus lie on in the upcoming years and what are your goals? For me one of the great things about working for the board is that I can translate problems or questions that occur at ECU’92 in my own life or vision of the world. When you’re thinking of the future, you also have to think about how you got where you are now and you have to question that position. What’s the point of making progress when you don’t know whether you’re heading in the right direction? So you have to make clear what your exact goal is before you can think of the means to achieve these goals. As you may have noticed, I can tell you quite a lot about being on the board of your study association for a year, but I’m running out of time. If you still have questions or just want to talk to me about this, don’t hesitate to approach me.
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Cooking Corner
Everything you need and more from the pie-chart of 5 Because we from the Ecunomist think it’s nice to see our readers are healthy and fit, we decided to take action! All that you need to stay healthy is on the pie-chart of 5, or in Dutch, de Schijf van Vijf! Now as you might know, cooking requires some creativity, but we must confess that this can be hard. To help you make the right choices, choose at least one option from each category. Success guaranteed within 7 days! 1. Meat/ Veggie/ Fish* □ Steak □ Tuna fish □ Vegetarian hamburger □ Any leftover in this category
4. Fat (yes, you need them) □ Bake your M/V/F* in olive oil.. □ ..Or in butter ! □ Cream sauce □ Or fat free to workon that beer belly?
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2. Carbs □ Rice □ Fries □ Mashed potato □ Pasta □ Old bread
5. Dairy □ A nice glass o’milk □ Cheese topping □ Yoghurt as a dessert □ Calcium pills
3. Greens (at least 200 gr!) □ Broccoli □ Tomatoes □ Greek salad □Or just the cucumber that has been lying in the kitchen for at least a week?
More! □ Red, red wine □ Salt & pepper □ Apple sauce □ .. A lost hair?
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Committee Page
Timing (BvvK)
Marijn Otte - “One half step too late or too early, you don't quite make it. One half second too slow, too fast and you don't quite catch it.” Film fans will recognise this quote from the football film Any given Sunday where Al Pacino is trying to motivate his team in a moment of dire need. Timing is, however, not only important during a football game. Carl Lewis, also from the sports field, once said: “life is about timing”. I am not entirely certain whether such a bold statement is true, but it certainly seems true that timing forms a pretty big part of life. We have all been in situations where timing was of the essence, do you catch the last train or drink another beer? Al Pacino puts it slightly differently: “You find out that life is just a game of inches”. The inches are everywhere in sports but also in the everyday life of a student. When learning for an exam you have to decide when to start and when to stop, when to move to the next chapter and when to get a quick refreshment. Also when making the exam you have to allot time to each question using the limited time available to its best purpose. It are these inches that matter, because, to paraphrase Al Pacino, when you add up all these inches that's going to make the difference between failure and success. The BvvK (Beleggings vereniging voor Kennis or the Investment Committee in plain English) also has to deal with timing issues. Every week we have a meeting and we have to decide what to do with our portfolio. During the past half year at least one person every week says what we all hope to be true: it can't get any lower.
So over the past half year we have claimed that it was the perfect moment to get in because stocks could only rise. On the basis of this motto we have bought, among others, turbos (a high risk, high yield investment product) in Fortis (apparently stock prices can go below their fundamental value), gold and oil of which each yielded a return of -90%. No need to say it was not a very bright half year, although in our defence: gold did rise substantially, but … only after we had lost all our money. Our just appointed activity co-ordinator, Jacob Hart, even made the sad point that we could have made more money by buying beer and collecting the deposit ('statiegeld') than by buying Fortis a year ago. I do not need to explain what we did. Fortunately though markets are on the rise and our newest member apparently has listened to my rant on timing. Since he joined us the markets have only gone up and he is now on a very healthy 48% profit. If you also want to deal with thousands of euros to invest, watch your own profit grow, learn everything about investment products and timing, you should come to one of our weekly meetings. For more information stop by the ECU’92 room. We hope to see you soon!
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Brenner
Reflections of a Eupodosaurus Y.S. Brenner - Amartya Sen, the Nobel Memorial Prize laureate of Economics in 1998 (for his contributions to welfare economics), is one economist who is always worth reading. So, I was happy to see his article “Capitalism Beyond the Crisis” in the March 26 – April 8, 2009 issue of The New York Review of Books. In this article he addresses the question whether capitalism needs to be changed. He says that some defenders of unfettered capitalism are convinced that it is blamed too much for the current crisis, which should actually be attributed to bad government (the Bush administration) and the behaviour of greedy individuals (Wall Street). However others believe that there are truly serious defects in the economic system itself, and that a “New Capitalism” is required. Amartya Sen himself agrees that apart from strategies for dealing with the immediate crisis, ideas about changing the organization of society in the long run are clearly needed. He says that relying on markets for economic transactions, the profit motive, and individual rewards based on private ownership are usually regarded as the hallmark of capitalism. But he doubts that this is entirely true these days, because in this sense the systems in Europe and America are not really genuinely capitalist. Most these countries have for some time now depended partly on transactions and other payments that largely occur outside markets and are not based on private ownership and property rights. Among these deviations from genuine capitalism he enumerates “unemployment 26
benefits, public pensions, other features of social security, and the provision of education, health care, and a variety of other services distributed through nonmarket arrangements.” Moreover, Amartya Sen adds, that the market economy has always depended for its own working not only on maximising profits but also on many other activities, such as maintaining public security and supplying public services. I must agree with him. All this is very true and I’m glad that it is true. But it is also true that capitalism continues to impose on societies a utilitarian valuation of people, objects and events. As Werner Sombart wrote in 1935 (see “Capitalism” in the Encyclopaedia of Social Sciences) the motives of persons and particularly of entrepreneurs can be many: the desire for status, power, the craving for
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Brenner
acclaim, the impulsion to serve the common good and the simple urge to action, but by virtue of an inner necessity they all become subordinate to profit-making, because without economic success almost none of these desires is attainable. This, alas, is as true in 2009 as it has been in 1935, and for this reason I’m afraid that Professor Sen’s definition of capitalism is too narrow. Worse than this, since the late 1970s or early 1980s the proponents of the Free Market turned unbridled selfinterest into a revered human quality. The point is that although self-interest is a powerful motor for advancing economic growth such growth can only be sustained in a society blessed by confidence and an adequate measure of income distribution. Professor Sen knows this, and quoting Adam Smith, he says that an economy can operate effectively only on the basis of trust among different parties. When business activities, including those of banks and other financial institutions, generate the confidence that they can and will do the things they pledge, all will go well, but today fear and mistrust is keeping credit markets frozen and therefore require state regulation, supervision and control. Not this alone. He also says that inequality and poverty can be economically debilitating factors. Mentioning John Maynard Keynes and Arthur Cecil Pigou, (who was more concerned than Keynes with economic psychology), he adds that the reduced incomes of one group of persons will
lead to reduced demand and thus to a reduced income of others and eventually to an economic downturn. Hence all in all, Amartya Sen suggests that Keynes needs nowadays to be supplemented and updated to include deep insights about the importance of the nonmarket institutions mentioned already by Smith and Pigou. The present economic crises, he says, do not call for a “new capitalism,” but they do require a new understanding of older ideas, such as those already mentioned by Smith and, nearer our time, by Pigou. But what he fails to say is that to restore the necessary confidence for both old and new capitalism to work properly is to get out of the moral morass into which the ThatcherReagan-van Agt ideology has led us which made an entire generation regard pure self-interest as the unifying principle behind all human behaviour and to equating egoism to individualism. Our social and economic system is once again in an accelerating process of reorganisation, and as I said in my retirement farewell address in 1996, the final outcome of any system’s reorganisation is always unpredictable. But if the politicians and economists who took us into the current crisis would join the bankers and apologise for what they did it would be helpful. Y.S. Brenner Bilthoven: April 2009
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Photopage Buitex Londen
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The Ecunomist - Annual Volume 18, Edition 4 - May 2009
Photopage Buitex Londen
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Startales Taurus (April 21 – May 21) So, in the previous Ecunomist I was talking about fireworks, but due to a mistake with the layout, part of my brilliant advice was gone. I hope you didn’t get yourself into much trouble, and that despite to our mistake, the fireworks in your relationship are back anyway. The coming weeks, watch out for everything that’s yellow! Aries (March 21 – April 20) One of these days, you will receive a mysterious letter from a mysterious person. (Or maybe, since we live in 2009, an email – But that’s not in the stars). You need to do exactly the opposite of what this letter asks you to, and you will be just fine. Gemini (May 22 – June 21) No one has an imagination like yours! You come up with the greatest ideas and always have a story to tell. But remember that the truth is at least as important. Cancer (June 22 – July 22) Know what you need to do? Get out! Go outside and smell the flowers, hear the birds sing, feel the fresh young grass under your bare feet ! I’m not asking you to become a hippie, but you know your current lifestyle isn’t the most healthy one on earth. Leo (July 23 – August 21) Maybe you should brawl a little less louder, so you could hear the voices of the other animals around you. No one is asking you to give up your pride, but being a good leader also means listening once in a while. Virgo (August 22 – September 23) Very exciting things show up in my crystal ball for you, because you have an admirer. This admirer is not a secret admirer, in the sense that he or she isn’t hiding from you. But to discover who I’m talking about, some efforts from your side are needed. Libra (September 24 – October 23) Hopefully you followed the advice I gave you last Ecunomist, where I warned you not to open any strange attachments to e-mails, especially not when it was full moon.
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Otherwise, I wish you all the best with your new virus. Scorpio (October 24 – November 22) Scorpios are going through a tough period. It’s like everyone wants something from you, and the responsibilities are almost becoming too much for you. Don’t be afraid to disappoint people. You will always be given a second chance. Sagittarius (november 23 – December 22) I’ve got something good for you in the love area! A little star told me that you’ve met someone who is going to be a very special person for you in the future. Maybe you already know who I’m talking about, maybe you don’t. Have fun! Capricorn (December 23 – January 20) Here’s some advice: try to open a study book! It won’t bite you, I promise. Furthermore, keep an eye on your neighbour. Isn’t it strange, that every once in a while he comes home late at night, dragging a garbage bag into his house with blood all over him? Aquarius (January 21 – February 19) Your pessimistic view on life is annoying the people around you. We all know that it’s part of your sense of humour, but when others get depressed, you should really consider a little more joy and happiness. Pisces (February 20 – March 20) Pisces, Pisces... You are a danger to yourself and others in the traffic! After all these neardeath experiences, doesn’t it appear to you: you HAVE to be more careful? Red traffic lights aren’t there for John with the short last name, and when a bus hits you, you will get hurt, believe me.
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Final say
The Mafia
Loura Vlam - If there is one organization with a direct link between economics and crime it has to be the Mafia. Lately, the revenue for this organization has increased from 90 billion Euros in 2007 to 130 billion Euros in 2008 (I wonder how they got these figures?). These “facts” make the Mafia the biggest company in Italy; their revenue is, for example, two times as high as the revenue from Fiat. If we would account their activities in the official statistics and forget about all their illegal affairs, this amount of money would count for seven percent of the Italian GDP. Of course, the major part of their profit consists of drug money, but things are changing nowadays. Recently, thanks to the economic crises, the Mafia also started making a lot of money by lending to shop owners against really high interest rates. Per day the Mafia earns 250 million Euros from desperate shop owners who cannot get a credit loan anywhere else. Due to the economic crisis, the Italian banks have stopped giving loans to these retailers. This has led to a certain amount of 180.000 shop owners calling for the help of the Mafia. An interest rate of 30 percent per month is not strange in this case and this leads, of course, to a lot of problems. For the Mafia, this is the ideal way to take over shops and companies. If the loans do not get paid in time, some big guy from the local Mafia will start with threats and violence. After that the shop owner has to come up with money quick or else really bad things will happen -- one of these things is that the Mafia will take over the shop. Due to this, the Mafia is now the proud owner of restaurants, grocery shops, galleries, flower and vegetable stalls and pubs all around Italy.
Can you imagine: seeing a big bloke standing behind a counter selling bouquets? So during your holiday this summer in Rome you should not be surprised if your coffee (on a terrace with view) at the Colosseum is being “served” by the Mafia. The economic crisis makes the Mafia even more dangerous than it was before. Well, you have to give this organization credit, because at least someone is smart enough to make a profit out of a crisis.
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((4 + 3)² + 4) / 1/4 = - - 11 + 6³ = - - -
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576 + 11 x 3² = - - 196 = - -
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