The Bull - Issue 2 by The Bull

THURSDAY 13TH OCTOBER 2014.......................................................................................................................................................................................................................................................................................ISSUE 2 VOLUME 4

THE BULL DUBLIN UNIVERSITY'S FINANCIAL NEWSPAPER - PAGE FIVE -

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DEFENCE INDUSTRY

FORMULA ONE

DOUBLE IRISH

UKIP

Alison Burns dissects what's currently happening in Europe's defence industry

Is the rich man's sport going bankrupt?

Is this the death of the fabled "Double Irish" tax scheme?

A fad or here for the long term?

- PAGE EIGHT -

US MIDTERM ELECTIONS How Republican Fever has taken over in the USA

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NEWS

RISE IN UKRAINIAN TENSIONS LEADS TO RUSSIAN CURRENCY CRISIS EMMA O'SULLIVAN

ussia could be faced with a currency crisis as the rouble sank to new lows against the dollar and the euro. This has prompted the Russian Central Bank to guarantee that it was willing to use its powers if the slide affected the financial stability of the country. The announcement was used to allay fears caused by an earlier lowering of the amount spent in defence of the rouble by the central bank and caused a slight bounce back after the initially large slide. However the Russia’s currency headache is not being caused by any central bank policies, the problem is much more fundamental. Firstly there is the collapse of world oil prices which have fallen by 25% in the last 5 months. This is of particularly concern for an economy heavily reliant on energy exports such as Russia. The other major issue is the ongoing crisis in Ukraine. This comes on a number of levels, to begin with there is the general instability that is being caused in the region by the conflict. With recent reports of unmarked military convoys heading through rebel areas to the key battleground of Donetsk and a subsequent increase in artillery shelling it is unlikely that this instability is going to end in the near future. The renewed intensity comes after elections were held in rebel controlled areas in defiance of the

Government in Kiev. As a result of the vote the separatist leader Alexander Zakharchenko was sworn in as leader of the unrecognized Donetsk People’s Republic. Russia is the only major power to acknowledge the result. With the peace deal in tatters and violence mounting the resulting effect on Russian exchange rates may force President Putin to rethink his strategy in the region. The other major way in which the Ukrainian conflict has damaged the rouble is through sanctions imposed by the West. These have led to the exclusion of certain Russian businesses from lucrative European and American markets thus driving down demand for roubles. There is also widespread fear that sanctions will only strengthen given the renewal of violence in Ukraine. Expectations have also been a powerful multiplier with the demand for dollars increasing in Russia as investors fear a further devaluation of the rouble, thus making it a selffulfilling prophecy. President Putin has established for himself a level of popularity that makes his position look formidable. However this currency crisis could see this level of support disintegrate as the Russian people compare current events with the financial crisis of the late 1990s. This so-

OBAMA'S SECRET NEGOTIATIONS WITH IRAN LISA KENNY

ontroversy is mounting in the US over a secret letter sent by President Obama to Iran. Mr Obama wrote to Iran’s Supreme Leader Ayatollah Ali Khamenei describing a shared interest in cooperating to defeat ISIS. The confidential letter was later leaked to the Wall Street Journal. Mr Obama’s former rival for the White House and long-time hardliner on the subject of Iran, Senator John McCain described the olive branch as ‘outrageous’ due to the continued support Iran gives to the Assad Government in Syria and Hezbollah militants in Lebanon. The news has also been greeted with dismay by the US’ Arab and Gulf allies who are fearful of Iran increasing their influence in the region. The White House refused to comment on what they described as ‘private correspondence’ but did reiterate that any formal negotiations with Iran were contingent on separate nuclear agreement by the end of November. However officials did admit that the Shia dominated country does have a role to play in fighting ISIS. Indeed Iran have already played a key role in arming and supporting Iraqi Shia militia that have played an important role in halting ISIS’ surge. It is also reported that Iranian Revolutionary Guards actually

participated in the Iraqi counteroffensive posing as militia. However they have also ruled out any formal cooperation with the US who it still sees as a major rival in the area. The Ayatollah has even gone as far as accusing the US of creating ISIS as a tool to undermine Iranian influence in Iraq. At the root of the conflict is the sectarian division between Shia and Sunni Muslims. ISIS is a Sunni dominated group that has found success exploiting the sectarian divide by recruiting moderate Iraqi Sunnis who feel squeezed in the Shia dominated country. This has made ISIS a serious threat to the major Shia power Iran who has also used divisions in Iraq to gain influence among Shia militant groups particularly in border areas such as Basra. Another important issue is the already mentioned nuclear negotiations which have a deadline of the 24th November. Recently the US Government has been downplaying the possibility of a settlement being reached. Talks seem to have stalled on the amount of uranium Iran would be allowed to enrich and how quickly sanctions will be lifted. With the Republicans now set to control both the Senate and the House after the Democrats defeat at the Midterm elections it is likely that President Obama will be forced into a particularly hard line approach if he is to get a treaty passed by the legislature

LETTERS REVEAL ECB PRESSURE FOR BAILOUT JAMES PRENDERGAST Recently declassified letters reveal that the European Central Bank used the threat of the withdrawal of support to the Irish banking system to push Ireland into a seeking a bailout and a programme of austerity in November 2010. Ireland's banks had become increasingly reliant on liquidity from the ECB in the months leading up to the letters and then ECB President Jean-Claude Trichet wrote to then Irish Finance Minister Brian Lenihan on October 15th warning that "Future decisions by the General Council of the ECB regarding the terms of liquidity provisions to Irish banks will thus need to take into account appropriate progress in the areas of fiscal consolidation, structural reform and financial sector restructuring."

This in effect was a call for Ireland to surrender its economic sovereignty. In his reply on November 4th Brian Lenihan assured Trichet that "The Irish authorities are embarking on a significant continuation and intensification of our policy actions to achieve budgetary sustainability". However in a veiled criticism of German Chancellor Angela Merkel Lenihan told Trichet that "it is imperative that comments particularly from senior political figures within the Euro Zone are consistent in their content and do not as an unintended consequence undermine the efforts of member states such as Ireland to address the serious difficulties that they are continuing to confront." Lenihan enclosed a number of articles with the letter detailing the surge in interest rates on Irish sovereign debt in response to a Fran-

co-German plan for private sector creditors to suffer losses on their holdings of Euro Zone sovereign debt. In his next letter on November 19th Trichet made his threat in even more explicit terms. The ECB would only authorise further emergency liquidity provision to the Irish financial system, Trichet warned, if it received confirmation in writing from the Irish government of commitment to a fourpoint plan. The plan involved Ireland seeking financial assistance from the Eurogroup, a commitment to a programme of fiscal and structural reform under the supervision of the ECB, IMF and European Commission, recapitalisation of the banking system, and the guarantee by the Irish government of the repayment of emergency liquidity provision. Replying two days later Brian

Lenihan conﬁrmed in relation to Trichet's plan, that Ireland had decided to seek "external support but called it a "grave and serious decision". He praised Trichet for advising him "personally and courteously in recent days". Ireland applied that day for a €67 billion bailout. This was not the ﬁrst time Trichet used letters to get his way. In August 2011 he sent similar letters to the Spanish and Italian Prime Ministers. The practice of using such threats has continued under new ECB President Mario Draghi. In March 2013 Joerg Asmussen threatened Cypriot President Nicos Anastasaiades with the withdrawal of liquidity provision for the Cypriot banking system unless it also submitted to similar terms to Ireland.

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EDITORIAL STAFF EDITOR:

CALLUM TRIMBLE-JENKINS

DEPUTY:

JAMES PRENDERGAST

DESIGN/LAYOUT: FEATURES:

JORDAN BOYD ANNA BRENNAN

FINANCE:

EOIN O'NUALLAIN

OPINION:

RORY O'DONOGHUE

ECONOMICS:

ANDREW NEVIN

PRO:

MARK HUGHES

US:

TOM KELLY

ASIA:

MICHAEL SCHOLZ JR

CAMPUS: EU:

BRIAN FLEMING ELEANOR O'MAHONY

HEALTH:

ANDREW CORBY

IRELAND:

RYAN MORGAN

Contact: thebull.tcd@gmail.com

EBOLA OUTBREAK: LARGEST EVER JAMES JONES

number of developed countries have now put measures in place to prevent any possible spread of the Ebola to their borders. Stricter controls are now in place for those travelling from affected areas included screening at airports. Most of this comes in response to the first fatality in the Western World, Thomas Eric Duncan a Liberian visiting the US died in Texas in early October. Following this there has been a number of secondary outbreaks among medical staff where Mr Duncan was treated as well as an unrelated case in New York. The Ebola outbreak has proved incredibly deadly in West Africa with the World Health Organizations reporting a confirmed 4,960 deaths. However the WHO believes that the real figure might be three times that number. The countries worst affected by the outbreak are Guinea, Liberia and Sierra Leone. The outbreak which is already the largest since the virus was first classified has caught hold in urban areas with weak healthcare provision leading to an estimated case fatality rate of 71%. The WHO has warned that there could be as many as 10,000 new cases a week by December. Despite practically all these cases being

conﬁned to West Africa it is difﬁcult to see how effective Western border controls will be in the ever connected world. So far there is no proven cure for the disease, however a number of potential vaccines are currently being developed. With fears mounting in richer countries over the spread of the disease any effective preventative measure could prove lucrative for the developer. It is not just in the US that healthcare workers have contracted the disease. Despite being equipped with protective clothing hundreds have died in West Africa after coming into contact with patients. The disease has also ravaged individual families particularly due to local funeral rights that include close contact with the deceased. Experts have warned against this as Ebola has proven to still be present in the body even after death. The World Bank issued a report at the beginning of October estimating that the economic effects of the outbreak could range anywhere between $3.8billion and $32.6billion depending on how quickly the spread can be stopped. With the United Nations warning that even with a sustained global push it will take at least 6 months to contain the disease, the already poor West Africa could see development levels plunge even lower without western assistance.

Serious complaints should be addressed to: The Editor, The Bull, Box 31, Regent House, Trinity College, Dublin 2. This publication is partly funded by a grant from DU Publications Committee This publications claims no special rights or privileges Correction: In our last issue, our article entitled ‘Bond’s Evolution’ was misattributed. The actual author was Eoin O'Nuallain. The Editor extends his apologies for this mistake.

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MEXICAN GOVERNMENT REVEALS 43 MISSING STUDENTS WERE MURDERED BRIAN EDGAR

exico’s recent history has been one marred with vicious gang violence between rival cartels competing for a slice of the lucrative drug trade to the US, however no single act has shocked the public more than the murder of 43 students. The students went missing on the 26th September in the city of Iguala, Guerrero as they made their way to a planned protest against what they saw as the discriminatory employment practices of the local government. On route they were confronted by municipal police, ofﬁcial reports are that once taken into custody the students were handed over to a local cartel and likely then murdered. The authorities have arrested Iguala’s mayor Jose Luis Abarca Velazquez and his wife as the probable masterminds behind the attack. While the couple were arrested in Mexico City roughly a

month after the incident, the local police chief Felipe Flores Velasquez remains a fugitive wanted in connection with the incident. The incident has become a major crisis for Mexico’s President Enrique Pena Nieto just as he had hoped to improve the country’s reputation and attract inward investment. The Government have been trying to move past the incident which has led to mass protests against the level of lawlessness across the country. On 7th November Mexico’s Attorney-General Jesus Murillo Karam gave a vivid account of what the state believed had occurred. The students he said were taken to a local rubbish dump before being murdered and their bodies burnt to conceal their identities. The remains of the charred bodies where then placed in bags and thrown into a nearby river. However this account is based on the reports of three detainees and there is of yet still no DNA evidence which makes this revelation unlikely to end this particular news cycle.

ANTI-AUSTERITY RIOTS ROCK BRUSSELS LISA KENNY

n anti-austerity protest in Brussels turned violent last Friday as clashes erupted between asmall minority of protesters and Belgian Police. The march, which was made up of an estimated 100,000 workers represents the start of a month of actions from Trade Unions as they oppose the Government’s new austerity measures. This will include a planned national strike on 15th December. Belgium's newly elected centreright Government is planning to increase the pension age, freeze wages and make signiﬁcant cuts to the public sector. They say that such action is necessary to keep the budget within EU guidelines. The police were forced to use water cannons and tear gas as they came under attack from a group of angry dockworkers, metalworkers and students. Flares were thrown and

cars set alight marring what had been up until that point a peaceful protest. This led to an estimated 40 injuries and 30 arrests. The Belgian Government has been in office less than a month and yet in this time they have caused significant friction over their economic strategy. The Government was formed by a mixture of Flemish and French speaking centre-right parties led by Charles Michel who is the youngest Prime Minister in the country’s history. When asked about his austerity measures he described them as necessary. However the Government was accused by the Trade Union leadership of punishing hard working families who have been squeezed as part of the financial crisis. They have argued that there are those who are more able to take the burden of austerity than their members.

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The announcement from the Attorney-General was timed to coincide with the beginning of President Pena’s visit to China. The trip will be a particularly difficult one for Mexico’s leader who recently cancelled a $3.75billion railway contract that was headed by a Chinese company. He did so in an effort to appease protestors who had complained the deal wasn’t transparent in the first place with a number of companies that set to benefit being known to be close to the President’s own party. In context the murder of 43 in a drug war that has lasted nearly 8 years and cost the lives of over 100,000 may seem insignificant but this was the murder of young people who had no visible connection with criminal elements with the implicit help of local authorities. It also came at a time when the Government had been attempting to downplay the violence and corruption which will now have an economic as well as a tragic human cost.

GROWTH IN US JOB MARKET SHAUNA MCILROY The US has seen its longest period of sustained growth in employment since 1995. The 214,000 jobs created in October represented the ninth consecutive month of job creation above the 200,000 mark. Statistics from the US Department of Labor show that unemployment now stands at 5.8%, 0.1% fall from the figure a month ago. This is the lowest the rate has fallen to since July 2008 and represent the small but solid strides being made by the world’s largest economy towards recovery. However for some the figures are not as powerful as they had hoped, with the New York Stock Exchange dipping slightly at the release of the figures. The relative strength of the US economy compared to other major developed nations recently prompted the Federal Reserve to end its Quantitative Easing pack-

age. QE had aimed to stimulate the economy by printing money to purchase private sector assets, in particular bonds. By doing so they increase their price and reduce their return, keeping long term interest rates low. This had an expansionary effect as investors searched for yield elsewhere. However Fed Chair Janet Yellen has now without setting a time frame promised to raise short term interest rates in due course. She is therefore looking to manage expectations of its monetary policy in the future. Her statement along with the ending of QE signals to the market that the Fed believe that there is a risk of overheating the economy if stimulus was to continue. They would only fear this if the economic forecast was positive. This outlook was not shared by the stock market which fell at the news, fearing that monetary expansion should have continued for the foreseeable future.

CATALANS CONSULT ON INDEPENDENCE IN DEFIANCE OF MADRID JASON KYLE

he Catalan ‘consultation of the citizens’ has as expected backed the region becoming an independent state. The result is non-binding and is there itself unimportant, rather it is a symbolic step taken in the face of opposition from Madrid. The Spanish Constitutional Court had banned the referendum based on an explicit passage in the Constitution which makes such votes the preserve of the central Government in Madrid. This led to the shelving of original plans to hold a vote on secession similar to Scotland’s recent referendum. Instead an unofficial and informal vote asking whether there should be an independent Catalan state was held with the help of nearly 40,000 volunteers. This however meant that there was no official electoral roll, undermining the legitimacy of the contest. This is not the first time that the Constitutional Court has blocked Catalan moves towards independence. In 2010 they rejected the

earlier Catalan Charter which gave the area ‘nation’ status in 2006. Madrid has every reason to fear a breakaway Catalan state, with the Spanish economy in the doldrums of 25% unemployment it is hard to see it surviving the breakaway of one of its most highly industrialized and developed regions. Indeed a secession would see a fifth of Spain’s output wiped out overnight. Pro-Independence campaigners claim that the region, dominated by its capital Barcelona would see significant economic benefits if they were to free themselves from the drag of Spain’s national woes. The fact that Catalonia contributes more to the national purse than it gets back is often pointed to. There are also historical and cultural issue in play, particularly the resurgence of Catalan culture in the decades since its oppression under General Franco’s brutal regime.

date with many who oppose separation simply not recognizing the vote, thus distorting the outcome. Indeed polls show that if the question went to a legitimate referendum independence is far from a forgone conclusion. Indeed Mr Mas will have watched events in Scotland, where the voters opted for the statue quo with horror that the same may happen to him. Nevertheless he will be hoping to take the very fact that a vote was held in the ﬁrst place to negotiations with the central Government as he hopes to wrangle even more powers for the highly devolved region including the ability to hold a decisive referendum on Catalonia’s future. However Spanish Prime Minister Mariano Rajoy has maintained that the vote will have no bearing on negotiations and that there will be no ofﬁcially sanctioned referendum on Catalonia’s place within Spain.

However the Pro-independence camp led by Catalan President Artur Mas must accept that the result does not provide them with a man-

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THE FUTURE OF THE

EUROPEAN DEFENCE INDUSTRY

ALISON BURNS

n the 4th of November 2014, another chapter in a sequence of cutbacks, Rolls-Royce announced that it is to cut 2,600 jobs. One of the key players in the European defence industry, behind BAE Systems, the Airbus Group, Thales and Finmeccamica, Defence News ranked Rolls-Royce fourteenth on a list of the top 100 defence companies in the world this year. With a decrease in the level of involvement of European countries in wide-scale warfare combined with the scars of a deep economic crisis, European governments have decreased their defence budgets, leaving defence companies in the region scrambling to cut costs or to seek out new sources of investment. On the 9th of October 2014, BAE systems announced plans to cut 440 management jobs from its Military and Information division and in January of this year, Airbus announced it was cutting 5,291 jobs in its space and defence division. Up until now, Russia has been the exception to this rule. According to statistics published by IHS Jane’s

Aerospace, Defence & Security in 2013, Russia climbed to number three on the list of the largest defence budgets in the world, just behind China and the US. However, the impact of recent sanctions and a fall in oil prices have changed utterly the predicted growth estimate for the Russian defence budget. A report recently released by Vedomosti, a Russian business publication, states that defence expenditure in Russia will increase by 21.2% in 2015. However, increases in 2016 and 2017 will be substantially lower than previously anticipated if the most recent draft of the 2016-2018 Russian budget can be believed. In addition to the economic woes of these companies who are trying to stay aﬂoat in the spaghetti bowl that is the European Defence industry, there is the problem of political tension among Western European countries when it comes to the question of defence. Historically, this has had a major impact on operating decisions of European defence companies, particularly when it comes to major mergers.

The failure of the 35 billion euro BAE-EADS merger in 2012 perfectly illustrates the complex and even frustrating role of politics in strategic decision-making among firms active in the defence arena. Failure to agree on the exact level of political control the French, German and British governments (who had significant influence over the individual companies prior to merger discussions) should have over this new mega-company is considered the main reason for the collapse of the merger. Although both BAE and EADS (now the Airbus Group) were able to adopt different strategies after the failure of the merger that have been effective so far, this case paints a worrying picture for the future of the defence industry in Western Europe. Without a consolidated defence industry, Western Europe’s current place as a key player in the defence industry becomes more than questionable. So, it remains to be asked, what is the future of the European defence industry? Russia is currently playing catch-up on the West in terms of defence technology. As predic-

tions suggest, it is likely we will see a slow-down in the growth of the Russian defence budget in the coming years as a consequence of the Ukrainian crisis. Couple that with the lack of a clear political consensus on the issue of defence in Western Europe, and it appears unlikely the structure of the industry will change . Looking to the future, it is likely that newspaper headlines will continue to announce job losses in the industry. However, between the messiness of the Western European defence industry and the wounded giant that is the defence industry in Russia, there is Poland. Poland is in the process of modernising, it is getting rid of old Soviet military technology and replacing it with more advanced Western models. According to Defence Industry Daily, by 2022 it is expected that $30 billion will be spent on military modernisation in Poland. If you’re looking for a European defence story with a bright future, hedge your bets on Poland.

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NO SECOND CHANCES:

EUROPE'S ILLEGAL IMMIGRATION CRISIS

ovember 3rd this year saw news of yet another tragedy at least 24 people killed as a boat carrying migrants from Afghanistan capsized not far from the Turkish capital. The boat was carrying more than 40 migrants, and has been reported as hardly seaworthy and woefully overcrowded. This tragedy was hardly novel - just over a year ago, more than 360 Eritreans perished as their boat sank off the Italian island of Lampadeusa. ANNA BRENNAN

Illegal immigration has long been an issue in Europe, and the increasing volatility of areas of the Middle East and North Africa, as well as the relative strength of European economies mean that the stream of migrants braving a perilous journey to Europe has not abated. There have been small efforts made in containing the problem around the Southern states. However, failing a concerted effort from the EU to deal adequately with the issue of illegal immigration, squeezed Southern states can ﬁnd neither the money nor the political will to continue to fund humanitarian programs for migrants. In Greece, patrols continue around the Aegean Islands, long a destination for migrants from the Middle East, or at least a stop on the way to the big city lights of central Europe. However, the budget for

Frontex (the EU’s response to border control) is tiny - just 100m a year, compared with the €60 billion paid out in farm subsidies. Similarly, under fire from human rights groups, Italy announced the end to its Mare Nostrum program, a search and rescue facility for incoming boats from North Africa. The decision came about as a result of fierce political pressure, and a staggering monthly cost of 9m to sustain in a country who is struggling under crushing debt, and a depressed domestic economy. Mare Nostrum has been replaced with an EU-financed mission called Triton - a whittled-down budget with a strict border control mandate, and a limited area of focus. Michael Diedring, head of the European Council of Refugees and Exiles slammed the decision as ‘inhumane’, asserting that ‘there will be more deaths.’ Given that more than 3000 people have died so far this year in the attempt to enter Europe, his prediction hangs ominously in the air. Yet the migration problem will not resolve itself - it remains one of the most contentious issues in EU countries. The fact that the EU refuses to take responsibility for the issue is both reprehensible from a human rights point of view, but equally is a bad move politically. As detailed in [Georgia Knapp’s article above] with right-wing par-

ties campaigning on nationalism and anti-immigration, the EU cannot realistically afford to remain oblivious. As ever with questions of immigration, tougher border control is only one part of the answer. In order to fully vindicate the ideals of the Union - freedom of movement for its citizens, a partnership based on trust and mutual advantages, the burden needs to be shared among all member states. This is the very basis of the Schengen project (of which Ireland and the UK have opted out), and yet falls on the same old sword - members are unwilling to share costs as well as beneﬁts. Part of the problem is that the Schengen agreements enshrine the responsibility of the outlying states - according to the Dublin regulations, the ﬁrst EU state where a migrant arrives is responsible for his processing. And if such a migrant is processed in Italy, Spain or Greece, he remains their problem, though it is likely that he sees the richer Northern countries as his ultimate destination. The logic of free movement necessitates a shift in thinking - as internal borders are broken down, so must outer borders be bolstered. Geography cannot decide who takes on this task - the burden must be shared between the Southern States who are on the front-lines, and the richer

Northern States in whose interest a decrease in illegal immigration would be. It is important to note that those braving the Mediterranean, while presenting a humanitarian tipping point, do not compose the vast majority of illegal immigrants. The biggest numbers are of those entering legally, by plane or ferry, and then overstaying their visas. Here, the disparity seems less sharp Germany, France, Britain and the Scandinavian countries receive a much large proportion of asylum requests than the Southern states. However, this does not change the overreaching argument - a concerted, cohesive EU effort must be mounted in order to regain control of the immigration issue, and that this effort must share the burden equally and equitably across all Member States. The bottom line remains that illegal immigration will continue as long as it seems a better alternative to life in their home country. There is no border security without common prosperity - and with rising unrest in the Horn of Africa, and across the Middle East, the streams of people seeking a new start are not likely to slow.

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FORMULA ONE

IS THE RICH MAN'S SPORT GOING BROKE?

PJ MCGRANE

ormula 1, a sport of great heritage and proud traditions has undergone a topsey turvey year. New engine regulations were controversial, tragedy struck in Suzuka, Japan in the form of Jules Bianchi’s horror crash while its greatest ever driver, Michael Schumacher remains on a long road to recovery after his skiing accident. On the other hand there have been positives such as the emergence of a new generation of young talented drivers, the resurgence of the Williams team is nothing short of what Frank & Claire Williams deserve and of course we can’t overlook the title tussle between Rosberg and Hamilton which has rivaled that of Frost and Senna. However in recent weeks there’s only one issue on people’s lips, money! Two of the backmarkers entered administration and it was announced Marussia would be wound up on the 7th of November. This isn’t an isolated incident. In the off-season Lotus struggled to ﬁnd funds and McLaren have no lead sponsor on their car. The question that has to be asked is how has a sport full of so much money and glamour seen such a radical collapse? The big problem associated with F1’s ﬁnancial health is the team’s expenditure, by any standards the expenditure is ridiculous. As seen from the table points cost about 100 million pounds and podiums

cost 150. Based on these figures the average a team spends is £127.3 million. We can go one step further and say teams spend on average 6.7 million per race but this figure isn’t very meaningful because the spending gap between the ‘Title contenders’, the ‘Middle of the grid’ and the ‘backmarkers’ is baffling. Can the teams really be blamed for their spending if their mandate is to win in a competitive environment?

Caterham and Marussia entered administration in recent weeks. Logistics meant they’d miss the American and Brazilian GP’s but they can skip the rest of the season and still be guaranteed their place on the grid next season once they can fund themselves however this scenario seems unlikely. Tony Fernandes owner of Air Asia and

QPR the Premier League football team sold the Caterham team over the summer saying that there is no room for small teams, an issue ignored by the F1 hierarchy who have tried to make us forget about Super Aguri who went bust in 2008 after 4 races. In all reality nobody expects Caterham to survive. Many felt Marussia may attract sponsorship because of the prize money they might win if the remain 9th in the constructers championships with the only 2 points the team has won its history courtesy of a fantastic 9th place ﬁnish by Jules Bianchi in Monaco but this was not to be with the winding up order given in the last few weeks. Does this mean there is a little more hope for Caterham, this remains to be seen. F1 needs to take a long hard look in the mirror and scrutinise its own business model. Rumours of ﬂoating on the Singapore stock exchange have amounted to nothing. The obvious answer can be seen by the fans in the form of a spending cap. Chrstian Horner and Toto Wolff both came out in support of the idea but is it the best answer? Small teams will never reach the cap anyway and a similar idea, a development budget pioneered by former FIA chief Max Mosely in 2009 failed miserably. Why would it be different in 2015? The best decision would be to share the revenues among team more evenly but

names and tradition means a lot and Formula 1 defining the influence at the top table. Formula 1 is full of financial insanity at every level. The Australian GP lost over 30 million this year but is still the season opener next year. How is that sustainable? In all reality F1 is an elitist sport that will bend to the big teams and the big names before helping the small, an issue that almost pushed 3 teams to boycott the recent American GP in protest. The sport is surrounded by luxury and excess and shows no signs of changing. Why would it if F1 doesn’t have any serious competition? Lets face it DTM racing and Indycar aren’t in the same league and Nascar is a different market. F1 King-Pin Bernie Ecclestone has always held the belief that you only need 2 cars to make a race and he recently admitted we might only have 14 next season. This begs the question how many cars do you have to loose before it hurts your credibility? We’ll have to wait and see.

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US MIDTERMS 2014: REPUBLICAN FEVER?

STEP RIGHT UP: WHO WILL LEAD THE REPUBLICAN CHARGE IN 2016? I

t’s a good time to be a Republican. After their complete overwhelming of Democrats in sweeping election victories across the US to win a Senate majority and take full control of Congress for the ﬁnal two years of Barack Obama’s presidency, the Grand Old Party can now turn their attention to 2016 with something of a spring in their step.

TOM KELLY

The president now stares down the barrel of a two year battle with a Republican Congress whilst leading Democrats who have been startlingly quick to heap blame for Tuesday’s debacle very ﬁrmly on his shoulders. With Obama’s presidency spiralling into irrelevance, the question of Republican candidacy becomes an interesting one. Unlike 2008 and 2012, Republican candidates are beginning to present themselves as truly viable. McCain, hamstrung by Bush’s unpopularity going into the election and beset at every stage by the Public Relations nightmare that was Sarah Palin, was seldom a convincing candidate against the Obama juggernaut. Romney was perhaps a victim of circumstance; American voters were becoming younger, less middle class and far more diverse, and Romney was a man whose chief concern at one stage of the election was gaining planning permission for a car elevator in the garage of his Californian mansion. A list of the potential Republican candidates for 2016 includes about a dozen names, standing in stark contrast Clinton’s current unassailability as the Democrats default

candidate. All the names on the 2016 shortlist come with their own personalities and appeal to different voters. On the right, Ted Cruz and ex-Arkansas Gov. Mike Huckabee are attractive to social conservatives, though not many else. However, there is a lack of a clear Republican heir apparent. Presumptive early frontrunners, such as Rand Paul and Jeb Bush, have shown themselves to be ﬂawed, reluctant or both. The party is used to having a front runner in its presidential races, and often nominates someone who has run before; thus, Rick Santorum, who defeated Romney in several GOP contests in 2012, undoubtedly hopes to ﬁll the "heir apparent" role in 2016. However, Santorum’s farright religiosity is unlikely to gain the approval of a party desperate to shed the WASP-ish ultra conservative image that the media has ceaselessly beaten the Republicans with. If this is to occur, upon whom will the GOP pin their hopes? Chris Christie is not the only one whose reputation is growing, but has built a foundation amongst voters and in Congress that very few of his peers enjoy. As one of the undoubted star performers of the last few weeks on the campaign trail, Christie helped the RGA raise $106 million and travelled to 37 states. Capitalizing on his own appeal, Christie made campaign appearances with almost every GOP gubernatorial candidate. He is sure to garner a strong vote amongst Irish-Americans, and indeed the iron will he has displayed

in the face of 2013’s Boston marathon bombing, as well as Ebola quarantine measures has endeared him to conservatives who often lambast him for being too moderate. His embrace of President Obama after Hurricane Sandy, immediately before the 2012 election, also hurt Christie among conservatives. But his landslide re-election in 2013 – in which he won a majority of the women’s vote, half of the Latino vote, and a third of Democratic votes – showed how he could be a strong contender in 2016 across demographic groups outside of his own. An overwhelming majority of Americans dislike Congress, and most Americans favour bipartisanship. That’s a sentiment Christie has leveraged in his home state, which voted for Obama and is a place where a Republican leadership cannot survive without support from Democrats. Christie has also won Democratic votes for agenda items such as pension reform. Rather than using his popularity to launch an ideological offensive (as so many of his Republican stable-mates do), Christie strikes a tone of conciliation: “We have established a governing model for the nation that shows that, even with heartfelt beliefs, bipartisan compromise is possible,” he said in his State of the State Address. “The folks in Washington, in both parties, could learn something from our record here.” The one blot on Christie’s copybook remains the strong sugges-

tions that a top aide orchestrated massive traffic problems in Fort Lee, New Jersey, last autumn as an act of political retribution against the city's Democratic mayor. For months, Christie and his administration have denied allegations that road closures in Fort Lee were politically motivated, though this may rear its head once more should Christie announce his candidacy. As scandals go, Christie’s is rather minor, however in the gladiatorial arena of US Presidential primaries it has the potential to cause a significant headache for the New Jersey governor. Despite this, analysts continue to rank Christie as a top-tier candidate in a Republican field with no leader. As chairman of the Republican Governors Association in a year when the GOP dominated gubernatorial races, Christie is currently enjoying a winner's aura that might continue to glow as far as 2015. Forbes yesterday published their annual ‘Most Powerful’ List, voting Vladimir Putin the most powerful man on Earth for the second year running. There is a sense that the disdain the American public feels for Obama stems from his loosening of the American grip on global geopolitical relations. It is worth considering whether a Republican president would have allowed such a situation to develop, particularly one with Christie’s typical New Jersey abrasiveness. Chris Christie is many things; polemic, big, brash and above all, maybe - just maybe - exactly what the United States needs.

THE BULL US MIDTERMS SUPPLEMENT

A GRAND OLD PARTY FOR REPUBLICANS

GEORGE BOND

he American Electorate dealt a major blow to the rest of President Obama’s time in office by giving the Republicans gains across the board. Crucially the GOP managed to seize control of the Senate from their Democratic rivals. This means that the both chambers of Congress are now arrayed against a White House that is already suffering from low approval ratings. Having struggled to force through his legislative agenda when the Republican’s only controlled the House of Representatives it now looks like President Obama’s legislative agenda for the next two years could be dead in the water. Deadlock, already having reared its head throughout Barack Obama’s time in office looks certain to be the trademark of the rest of it as well. There is still fear in the Republican Party of the ultra-conservative grass-roots who have proved a powerful source of both money and support for challengers to incumbents seen as too liberal. It is unlikely then that President Obama will find any friends on that side of the aisle, but what about his

own? Throughout the campaign Democrats were distancing themselves from their leader seeing his rock bottom approval ratings as toxic to their own chances. This has robbed him of a powerful tool of a sitting President, coattails to elect supporters who will then return the favour once elected. Now the Majority, Republican Mitch McConnell will replace Democrat Harry Reid as the Leader of the Senate. This makes the already inﬂuential Senator from Kentucky one of the most powerful people in Washington, however he will have to be careful as polls suggest that disillusion is high with politicians of all persuasions. WIth the Presidency itself up for grabs in the coming years he will want to avoid the wrath of the public for perceived inaction. Indeed both the Leadership and the White House have promised to work together to end the gridlock, what is meant by this is however unclear. The Republicans made their Senate gains in Arkansas, Colorado, Iowa, Montana, North Carolina, South

Dakota and West Virginia, while they are also hotly tipped to make at least one more gain when the races that are currently too close to call declare. There were also signiﬁcant gains in the House for the Republicans who have increased their majority by 12 seats. In what was a poor result all round for the Democrats, expected gubernatorial gains failed to materialize. Indeed on top of holding on in a couple of tight races, namely Georgia and Maine the Republicans made a net gain of four to the Democrats one. This marks a good night for Republican presidential hopeful New Jersey Governor Chris Christie who oversaw the statewide races for the GOP as Chair of the Republican’s Governor Association. However it was a mixed night for Democratic frontrunner and former Secretary of State Hillary Clinton. The former First Lady and Senator backed 13 winners while 12 of candidates lost. It is unlikely that this is represents personal political blow, instead indicative of

Democratic slides across the board. The election itself lacked a dominant theme that has been prevalent in previous midterms. This was to the detriment of the Democrats who were pulled down by President Obama’s unpopularity as that itself became the most salient issue to voters. In what was a mixed night for America’s famed political dynasties, Jimmy Carter’s grandson Jason lost the race for the Governor's Mansion in Georgia, however George P. Bush, grandson and nephew of two Presidents respectively was elected as Texas Land Commissioner. Oregon and Washington DC have now legalized Cannabis following backing from the electorate at the ballot box. They now join Washington and Alaska who have previously relaxed laws on the drug.

THE BULL FINANCE

LINKEDIN: CAN IT WORK IN CHINA? E

MICHAEL SCHOLZ JR

-bay, Facebook, Twitter, Google... these companies and many more all share a common burden. They have all failed to enter and maintain their position in the Chinese market, a market with over 600m internet users. Nonetheless, undeterred and quite successful, LinkedIn is proving to be one of the few exceptions. China is well-known for its internet restrictions, and given recent protests in Hong Kong, has even targeted Yahoo and Instagram. The government quotes political reasons for censoring the internet, and with numerous indigenous alternatives (WeChat, Baidu, Youku...), the majority of the population happily do without these services. However, LinkedIn is a different story. With just over 5 million users in China, the potential to tap into the Chinese employee pool is huge. And in order to do this, Jeff Weiner, the CEO is willing to make many adjustments. For example, a new Chinese platform was brought out earlier this year, a version which adheres to stringent government requirements. Without several features, like the ability to create and join group discussions or write long essays, LinkedIn has done what Twitter refused to do- compromise key components of the service in order to gain the blessing of the government. To strengthen its position even further, LinkedIn has entered into a joint venture with two local ﬁrms (CBC and Sequoia Capital), which has helped maintain its relationship with the government. With knowledge of this region, and willingness to comply with public censorship issues, the ﬁrm could reach over 140m professionals without interference of the government.

To address censorship concerns LinkedIn has announced that it will only implement Government restrictions when and to the extent required. The company (which has been blocked in the past) would be given a significant notice period from the government in which to resolve any issues. They have also guaranteed that they will be transparent about how it conducts business in China using multiple avenues to notify members about its practices. On top of this the company will undertake extensive measures to protect the rights and data of members. Equally, it is of interest to the Chinese government to let LinkedIn operate in China. LinkedIn is the largest professional network operating globally, and as such has the competitive advantage over any local company which may exclusively possess over a network of domestic users. By allowing LinkedIn operate in China, analysts believe it will make the employment market more efficient, ultimately aiding to Chinese economic growth. Nonetheless, there are existing competitors to LinkedIn in China, such as Zhaopin and 51jobs. And if there is one thing we can learn from previous examples of foreign firms failing in China, it is that consumer confidence ultimately lies in domestic companies. E-bay may have been a first mover in the PRC, but it was eventually crowded out by locals, such as JD or Taobao. So why does LinkedIn believe it can enter the Chinese market, not even with the advantage of being a first mover?

LinkedIn is currently signiﬁcantly behind in terms of Chinese market share, it may gain it through having an appealing global network of employers and employees. And by playing into the hands of the government, as well as cooperating and coordinating with local ﬁrms, such as CBC and WeChat, it may ground itself into Chinese society. It becomes a three-way winning situation for the company, the consumers (employment-seekers and employment providers) and the government.

The answer may lie in the unique service offered by LinkedIn, which is practically unrivalled. While

To conclude, however, there is a completely different threat to LinkedIn, and that comes in form

of an informal institution culturespeciﬁc to China. Guanxi, or the personal relationship network acquired through family or friendship ties may hinder short-term expansion of LinkedIn as its alternative. Though it may be compared to similar systems of family networks in the West, where LinkedIn is thriving, it is very difﬁcult to determine whether Guanxi may be strong enough to hold back this multinational.

THE BEST, BUT NOT UNBEATEN I JACK LYONS

t’s a game of endless strategies. Some are in it for the long haul, others just for short-term gains before moving on. Some bet with the market, others bet against it, everyone searching for value. However, for years it has been the general consensus that one man in particular has mastered the game of equity investing. Warren Buffett, principally considered a value-investor, whose mantra has always bee n that he invests in companies, not stocks, has seen his company, Berkshire Hathaway, increase its market capitalization by 400% since 2000. Probably the best

known investor of his generation, it would appear that Buffett holds the recipe for success. However the equity market, by nature, is full of surprises, and it’s even possible that the great Warren Buffett himself may be caught out at times, which is precisely what happened on October 2nd. Following announcements that Tesco had slashed its first half profit outlook by £250m due to an accounting error, its share price fell as much as 11.6% in one day. Combining this with the price wars Tesco have been engaged in since the arrival of Lidl and Aldi, and several other profit warnings throughout

the year, Tesco was left with a share worth half the value of what it was on 06/11/13. Following this catastrophe, Buffett, who sustained a loss of around $800m(£500m), stated that: "With Tesco, we deﬁnitely made a mistake. I made a mistake on that one more than anybody else made a mistake ... That was a huge mistake by me..," Effectively this tells us that, no matter how good an investor you claim to be, no single investor can hope to know everything. While you can improve your chances by researching and analyzing a ﬁrm

well, often the market will provide shocks that are completely unpredictable. For the most part it is not even necessary to win more times than you lose, but the key is to limit those losses and not allow them to spiral out of control, as we witnessed in Buffett’s case who, on October 16th sold off 245m shares in the supermarket giant, bringing Berkshire Hathaway’s holding to below 3%.

THE BULL FINANCE

LONG HAUL AT LOW COST: A SHIFT IN AIRLINE OPERATIONS N

HUGH O'FLANAGAN

early 40 years have passed since the aviation industry’s first attempt at developing a model of long haul, low-cost flying, yet no airline has been able to replicate the success seen on the shorter routes. The inefficient, legacy carriers, flying long haul, have somehow managed to see off every lowcost rival since 1982. So, what is it about this segment that remains so difficult to exploit, or is it that the carefully refined model of low-cost travel is simply not suited to longer journeys? Big jets, primary airports and business class seats characterize long haul flying, but when we look at the operations of low-cost airlines, it seems the two are worlds apart. A single aircraft type is the secret to success for most no-frills airlines. Ryanair has chosen short haul champion, the Boeing 737, while EasyJet opted for the Airbus A320. Single model fleets allow airlines to cut costs on everything from gate charges to staff train-

ing and maintenance costs to the cushions on your seat. These economies of scale offer huge flexibility, a thin cost base and cheap tickets. Network constraints of long haul services are not conducive to one aircraft type, and these savings are not a privilege that long haul providers enjoy. They have cut down their turnaround times (to often less than 20 minutes), their crew are not unionized and work longer hours, the cabin fit out is cheap, seats are crammed and baggage is light. This carefully refined business model allows for no unnecessary cost. In long haul, there are two lucrative revenue streams that low-cost carriers ignore: business class seats and cargo in the hold. And, these streams flow hot and heavy for most carriers. Business class seats usually account for one-fifth of total seat capacity, while delivering 60% of revenues. Cargo contributes a further 15-20%. In effect, the elite in front of you, and the four-legged

below you, subsidize your economy ticket. With such large proportions of revenue stemming from these two activities, where would a lowcost rival make up the shortfall? As it stands, the current low-cost model is unsuited for long haul travel and in order for us to enjoy cheaper transatlantic journeys there needs to be a fundamental shift in how these airlines operate. Encouragingly, the manufacturers have their ear to the ground. Boeing and Airbus both offer aircraft that could be well suited to this role: the 787 Dreamliner and the A350 XWB. Both offer considerable fuel savings, long ranges and multiple seat configurations. With 20% greater operating efficiencies, these aircraft can carry over 300 people, the minimum required to make a decent return on their investment. However, with price tags of over $200 million, it’s easy to see why low-cost carriers haven’t filled out the order forms.

Attention is shifting to South-East Asia, a region hotting up with aviation competition. Tigerair, Scoot and Cebu Pacific have all plunged into the low-cost market, with plans to offer long journeys at low prices. NokScoot and AirAsiaX will join them shortly. They all have their eyes set on the 787 or the A350. The only region in the world where aircraft orders exceed current fleet sizes, it seems that these airlines are committed to buying new, fuel-efficient aircraft. It remains to be seen if their attempts will be more successful than that of Sir Freddie Laker back in 1977, but with the right aircraft and broader revenue streams, they should be able to capture the success enjoyed by none to date.

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THE BULL FINANCE

HAS MOMENTUM ON M&A ACTIVITY FINALLY COME TO A HALT? ANDREW CORBY

s the year is winding down, so may the M&A activity. With low interest rates and an ample availability of capital, 2014 has witnessed some of the most colossal M&A deals in history. Activity shook off the post-2008 hangover and by August, there was $1.16 trillion worth of US deals inked since the beginning of the year, a sum that matches the deal volume generated during all of 2013. Last year wasn’t exactly timid, as US M&A activity topped $1 trillion for the ﬁrst time since global economic crisis in 2008. Pharma has been a signiﬁcant player on this recent surge in activity. Global M&A deals in the healthcare/life sciences sector hit an un-

precedented $317.4bn in the first half of 2014, and that is excluding the attempted mega-merger of Pfizer and AstraZeneca in May, valued at over $120 bn. One of the primary drivers for deal making has evidently been tax inversion. This is a process whereby companies domiciled in Ireland and the UK are acquired by companies (previously) domiciled in other jurisdictions in order to take advantage of lower corporate tax rates. In moving the domicile of the parent of the group, the tax that would be otherwise payable on overseas profits can be reduced. With corporate tax rates of 12.5% and 21% in Ireland and the UK respectively, in comparison to 35% as is the case in the US, Ireland and the UK have offered themselves as corporate havens for large multinational companies.

Recent activity has received much attention from the White House, with President Obama deeming the practice as “unpatriotic”. The US treasury have since stepped in, and on September 23, it was announced that it would more difﬁcult for companies to meet the requirements for an inversion to occur and harder for companies to access cash overseas without paying US taxes. The new rules will stop non-US subsidiaries from making loans to their new foreign parent as a means of not paying tax. It will also stop the new parent from buying overseas subsidiaries to free that cash from US tax. It will become more difﬁcult for companies to meet the requirements of an inversion, by imposing a new rule whereby the shareholders of

the foreign partner must own 20% of the US company. In light of these new tax rules, the much speculated AbbVie Shire merger valued at over $55bn collapsed this week. CEO of AbbVie Richard Gonzalez stated “Although the strategic rationale of combining our two companies remains strong, the agreed upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in our best interest of our company to proceed”. AbbVie said that it would recommend shareholders to vote against the deal in response to the new rules imposed and on October 20, the deal had ofﬁcially collapsed. The price of the break-up? A healthy $1.64bn to Shire once company shareholders had ofﬁcial-

ly voted against the transaction. Although President Obama may be tempted to claim a victory on this recent deal-collapse, a closing of one loophole may lead to the quick opening of another. A lot of speculation has gathered, lead by Washington lobbyists, as to a complete 180 in the scope of M&A deals, turning US ﬁrms from ‘hunters’ to ‘prey’. AbbVie has made a convincing case of the savings it stood to make by re-domiciling outside of the US. However, now the Shire deal has collapsed, their engagement has only served to make AbbVie a target. If an Asian or European company swoops on the US business, the US will still lose out on tax receipts, but to make matters worse, it will also lose the company that paid them.

CONOR MURRAY Budget Figures and Targets

Funding Taxes

- Unexpectedly high growth ﬁgures of 4.7%

- No new excise duties were added to alcoholic products.

- Budget 2015 plans for a 2.7% deficit next year, which is within the EU set target of 3%.

- An additional charge of €0.40 has been added to a pack of twenty cigarettes. A €0.20 has been added to every 25g of rolling tobacco.

- Gross current expenditure will increase by €429m to €50.08 billion.

- VRT and motor tax are unchanged.

- This is the ﬁrst budget without austerity measures in six years.

Higher Education

Income Taxes

BUDGET 2014: KEY FACTS

- The top tax rate has decreased from 41% to 40%. - The entry point for the top tax rate has increased by €1000 to €33,800. - Entry point to the Universal Social charge has been moved upwards from €10,000 to €12,012. - The top rate of the USC is now for PAYE workers 8% for those earning above €70,000, with the selfemployed earning above €100,000 charged 11%. Corporation Tax - “Double Irish” tax loophole will be closed from January 2015, with companies already under such a scheme given until 2020 to regularise their tax affairs. - The 12.5% corporation tax rate remains. - The “Knowledge Development Box” has been unveiled, under this scheme intellectual property registered in Ireland is taxed at “a low competitive and sustainable tax rate” .

- There have been no cuts to the Student maintenance grant. - The student contribution fee will increase, as planned, to €3000 next year. - €25 million of funding which was withheld from higher education in 2013 and 2014 is to be returned in the coming year. Accommodation - The rent-a-room schemes threshold for tax free income has been raised to €12,000. - €803.8 million is to be allocated by the government towards various housing schemes, with local authorities set to provide 946 new housing units.

THE BULL ECONOMICS

ANDREW NEVIN

olitical differences in Northern Ireland are causing major setbacks on issues such as how todeal with the controversial past of the Troubles. However, it is evident that the power-sharing government are facing a stark fiscal crisis that in some respects is as severe as in the republic during the financial crisis. There have been obvious political disagreements between the two main parties in the Executive, Sinn Fein and the Democratic Unionist Party, over welfare reform and spending cuts. The recent agreement of a draft budget for next year will result in public spending cuts of up to £1bn. Inability to reach an outcome would have meant the immediate loss of £100m of emergency funding. The Executive has never faced an economic challenge like this before, as it came into existence in an era of very generous public spending and there was a significant amount of European money available. Northern Ireland is in a particular exposed position to the cuts, given that its economy is dominated by the public sector. If the government failed to agree a draft budget, economists predicted that the North would have run out of money by mid next year.

The draft budget for 2015/16 means some department’s still face ‘challenging’ reductions of more than 10%. The Department of Environment, which has responsibility for local government, faces the largest cut – 11.1% in cash terms, to £103.7m. Some departments have been put in a near impossible financial position. This paints a picture of a negative financial outlook for Northern Ireland and although the agreement may be an important political step, it can be suggested that the crisis has been in part caused by the failure of the devolved government to make tough choices on public expenditure decreases. Instead of focusing on economic issues and difficult financial decisions, the Executive has danced around those issues and focused on local issues, based on the historical legacy which still holds influence in the political sphere. Parades and flag disagreements may take a back seat in the immediate future, as the fiscal crisis could very quickly result in new protests on the streets, such as public sector pay or new tax protests. Life in the North is about to drastically transform, and the journey will be extremely agonizing.

disagreements over welfare reform and the impacts of this has led to questions being asked of whether the politicians in the power-sharing Executive could really cope if more responsibilities were handed to them from Westminster. Furthermore, the Executive may have spending priority powers, but has little to none increasing revenue powers. It has been contended that the North needs to review its economic structure and be granted devolved power so that it can create measures such as lowering corporation tax to compete better in the battle for foreign direct investment.

FISCAL CRISIS IN NORTHERN IRELAND

The economic situation in Northern Ireland is extremely dark, and as the challenge of peace in the North is seemingly improving day by day, the ﬁnancial outlook is vulnerable. Although welfare reform has been solved by the Executive, the ﬁscal crisis will undoubtedly pose greater challenges to the Executive and to Northern Ireland as a whole in the future.

The ﬁscal and spending crisis in Northern Ireland has led to debates over devolved powers. Recent

RYAN MORGAN

DEATH OF THE "DOUBLE IRISH"

his year’s budget has received much domestic coverage for being triumphed by the government as the end of the “budgetary austerity” seen implemented in recent years, but overseas the spotlight has been very much fixed on the abolition of Ireland’s infamous ‘double Irish’ tax structure - a controversial scheme widely perceived as a tax avoidance strategy multinationals use to bypass paying their fair share. Speaking in the Daíl chamber last month, Finance Minister Michael Noonan described the move as “giving certainty to investors about corporate tax in Ireland for the next decade” and aligning the country with “best practice internationally.” In essence, the complicated structure enabled many multinational companies, particularly of the IT and pharmaceutical variety, to steer their profits away from the relatively hefty corporate tax they would have been subjected to on their home soil by transferring royalty payments for intellectual property to an Irish subsidiary. These profits were then forwarded to another Irish-registered subsidiary that resided in a tax haven, such as Bermuda, where they were stored. Such a method allowed these companies to significantly cut their tax rate below Ireland’s already low corporation tax of 12.5% to as little as 2%. Mounting international pressure against the Irish government and these multinationals had been ac-

cumulating from various economic authorities for some time, including from the OECD and European Commission, who are attempting to tackle tax avoidance strategy’s being utilized in their respective jurisdictions. This pressure seemed to reach its apex this summer when President Obama described US companies availing of tax inversion methods as “unpatriotic” adding that “if you’re basically still an American company but you simply change your mailing address to avoid paying taxes then you are not doing right by the country and its people.” Moreover, much criticism is also being derived from home with TASC, a left-leaning thinktank, accusing the scheme of causing Ireland “reputational damage” on the international stage. However, Ireland has based much of its economic growth and job strategies in recent times on the bedrock of such tax policies and fears are emerging from many business leaders, including former Apple CEO John Sculley, that despite other business-friendly provisions, the country risks losing its competitive edge as a European base for many American companies. With the country’s biggest loophole coming to an end for new companies at the beginning of next year, the creation of a so-called “knowledge development box” that will enable businesses to pay lower tax rates on their intellectual property, has ensured that any sense of panic remains at bay for the time being.

THE BULL OPINION

LIVE YOUR LIFE: AN ALTERNATIVE VIEW ON CAREERS' WEEK E

BRIAN FLEMING

very year, from the last week in September to the first in October, careers’ week takes centre stage in Trinity. It’s difficult to avoid with facebook events detailing industry and firm insights taking place every other night for the big investment banks, accountancy and law firms that all seem to be quite similar in operation. Speaking from experience I can attest that each address stresses how good it is to work in one of those environments, the challenging career and exciting work. One would struggle to see how this is so considering the level of stress one is under coupled with gruelling hours in these ‘industry leaders’. Heavy investment in graduate recruitment therefore is a must to compensate for the rate of staff turnover, hence the yearly pilgrimage to career’s week. So, why the consistently strong interest from our student body? For some it’s genuine but for most I’d wager, it’s the manifestation about being unsure of their future career path.

The draw of very attractive graduate wage is also a huge incentive, to be fair. But not being able to see the future is ﬁne, in fact it’s an incapability we should welcome, for it enables us to be ﬁlled with excitement instead of panic and apprehension for life after college. As students we shouldn’t feel pressurized into making a huge decision about our future now. Around this time last year, Tim Minchin, while giving an outstanding Occasional address to his alma mater of Western Australia, put a ‘careers’ week’ in perspective. “Most people I know who were sure of their career path at 20 are having a midlife crisis now” I can’t help but agree with Mr. Minchin. And I remember countless nuggets of wisdom I’ve received from those that have been through it all before me. “Enjoy it while it lasts. You never know where you’ll end up.” Some would argue that

internships exist for that very reason, to explore the career to help in your decision-making, which is a fair point. Internships are great in that they polish up your CV, get your foot in the door and expose you to the realities of the working world. Personally the latter had the greatest beneﬁt for me. Three months of labour in a bank, wishing away my summer, watching the clock tick by agonizingly slowly and exercising the height of my self-control to avoid social media, where I was constantly reminded of all my friends having the time of their lives, was my internship in a nutshell. Tim was right. There is no rush. My friends still recall with fondness, hysterical stories and comical characters from their adventures and admittedly I feel like I missed out. When I evaluate the experience I can honestly say no part of it made it an efﬁcacious endeavor when compared with having a great summer with your best friends. Admittedly, I’m unlikely to

get the opportunity again. I am aware of how hypocritical this article may seem given its source in a student ﬁnancial publication but I implore you to take head of its main message. Our college years constitute a fraction of our lives and for that reason we should be concerned only with enjoying them as much as possible. Trying to ﬁnd a career path that suits you by undertaking an internship is all well and good, but avoid the stress of uncertainty and embrace it, let life happen to you.

THE TIME IS RIGHT FOR THE EUROZONE TO ACT O

NEIL WARNER

ver the past two years the almost unremitting panic that gripped the Eurozone during the sovereign debt crises between 2010 and 2012 has gradually and at times almost imperceptibly subsided. The decision of the European Central Bank (ECB), after several years of effectively fiddling while Rome burned, to finally adopt a more proactive attitude similar to the one taken by the US Federal Reserve during the 2008-9 financial crisis, seems to have finally brought an element of calm to the currency union. It seems, however, that the sense of cautious assurance that had developed about our immediate economic future by the beginning of this year has begun to evaporate. The financial and to some degree the wider economic situation in Ireland, Spain, Portugal and even to some extent in Greece has stabilised somewhat (even if it’s still a rather miserable kind of stability). But the difficulties facing the second and third largest Eurozone economies, France and Italy, seem to be getting more serious. Italy is back in recession, and a persistently stagnant France is struggling to avoid the same fate. Meanwhile the Eurozone as a whole seems to be creeping steadily towards deflation. The inflation rate for the Eurozone in August fell to 0.3%, in spite of the historic decision of the ECB to introduce ‘negative interest

rates’ for deposits held by European banks this summer.

puts it, ‘the best of capitalism is over for rich countries’.

It’s not that these problems present Europe with any kind of immediate catastrophe equivalent to the kind that was feared in the summer of 2012. But the situation is nonetheless especially worrying for two reasons: Firstly, because of the apparently depth of the longterm problems with the European economy of which its current predicaments are symptoms. Secondly, because of the current bizarre unwillingness of Europe’s leaders turn to even short to medium-term remedies which are on offer.

But what makes things even more worrying though is the remarkable conservatism, complacency and inaction of European leaders in the face of these problems and their apparent unwillingness to respond properly to even the more to the immediate problems such as possible deﬂation and low demand in the trusted ways which history and economic theory shows could work. The very low rate of inﬂation that Europe continues to experiences indicates that a major problem for the European economy continues to be very low demand and the fact that this has continued in spite historically low interest rates indicates that action beyond monetary policy is necessary. This was recently acknowledged even by Mario Draghi, who continues to come across as unusually reasonable by ECB if not by normal human standards.

Much of Europe does seem to be stuck in a long-term trap of sluggish growth and high and incrementally rising unemployment that go back to well before 2008. Pessimism about the long-term fate of European capitalism seems increasingly justified and recent theories and findings reflect this – from Larry Summers’ suggestion that the developed world may be in a state of ‘secular stagnation’ which is only temporarily hidden by artificial credit bubbles of the kind seen before 2008 and possibly currently taking place in the UK, to Thomas Piketty’s argument that we face continuously rising inequality and capital accumulation outpacing wages, to the OECD’s predictions for the world economy up to 2060 that indicate , as Paul Mason

Yet in spite of this glaring evidence, European leaders continue to be ﬁxated with ﬁscal consolidation rather than considering any kind of expansion or addressing the imbalances between the German economy and the rest of Europe. Their standard solution to Europe’s problems continues to be essentially to deregulate business and reduce labour rights and wages. Even the supposedly

centre-left governments of France and Italy continue to regard their countries’ economic problems as primarily supply-side ones. In fact, as demonstrated by the recent dismissal of Arnaud Montebourg from the French government for being openly critical of austerity, they seem to be moving even further in that direction. When they do timidly suggest the need for Europewide expansionary policies of some kind, this is given short shrift by Germany – even though the Social Democrats are now part of the government there. In comparisons between Europe and the United States, for decades now it has been accepted and assumed that a key difference separating the two major industrialised regions of the world has been that the United States embraced the ideology and practice of free market capitalism far more enthusiastically and completely than Europe, which on the whole has been far more ready to recognise the need for much more extensive government intervention in economy and society. Yet amazingly, Europe in the last few years has come across as signiﬁcantly more suspicious of government intervention than the United States. This cannot bode at all well for Europes already bleak economic future.

THE BULL OPINION

THE EBB AND FLOW OF CRISIS O

JAMES PRENDERGAST DEPUTY EDITOR

nly a few weeks ago it appeared that the more than five-year-long global boom in financial markets might be over with signs of renewed trouble in Europe, and as the market prepared, after many premature “taper tantrums", for the final end of quantitative easing by the US Federal Reserve. But the Halloween announcement of a truly extraordinary monetary expansion by the Bank of Japan sent markets soaring towards new highs. Lately there has also been a noticeable breakdown in the usual relationship between share prices, commodities and currencies. The typical relationship has been that as share prices rise, the US dollar falls and riskier currencies and commodities, seen as linked to the economic cycle, gain. But most recently as share prices in the US have reached record highs commodity prices have remained near five-year lows while emerging market currencies and those of commodity exporting nations such as Australia have also fallen to multiyear lows against the dollar. This all reflects a movement of capital back to the United States as expectations grow of interest rate hikes by the Fed. Employment growth in the US has been above 200,000 for nine consecutive months, the longest such stretch since 1994. Conditions could hardly be any different in Europe where many countries remain in depression.

The European Central Bank can only be pushed further in the direction of quantitative easing, despite vociferous opposition from Germany, while the Bank of Japan’s newly announced programme of quantitative easing makes even that of the Fed look paltry. The BOJ is in effect ﬁnancing the expenditure of the Japanese government by buying almost 70 per cent of monthly government bond issuance and deliberately and dramatically pushing down the value of the Japanese yen. This plunge in the value of the Japanese currency will put further pressure on the ECB to loosen policy as Germany competes with Japan in many industrial sectors such as machine tools and car manufacturing. This particular constellation of market movements could be viewed very ominously given historical experience. The last time there was such dollar strength and yen weakness was following what the economic historian Robert Brenner calls the “reverse Plaza accord” of 1995 that involved cooperation between the US, Japan and Germany to reduce the value of the yen and the mark against the dollar. The ensuing reversal of capital ﬂows to the US at the expense of emerging markets fuelled both the dot-com stock market bubble and also helped trigger a series of cur-

rency crises in emerging market economies that had been undergoing domestic credit bubbles. This chain of crises started in Mexico in 1994, moving on to East Asia in 1997 and to Russia in 1998 before engulfing Brazil and Argentina in 2001 and 2002. Since the start of quantitative easing in the US in 2008 a $3 trillion “carry-trade” has emerged which involves investors borrowing in low-interest US dollars and investing in higher-yielding emerging markets. The analogous yen carry-trade that played a large role in fuelling the US housing bubble before 2007 was a mere $1 trillion. This carry trade has helped propel significant domestic credit booms in many emerging markets – in China the value of debt outstanding is now more than 250 per cent of GDP. With the end of quantitative easing in the US overall credit conditions will tighten and countries with large dollar denominated debts will be particularly vulnerable to the rising dollar. East Asian manufacturers will be further squeezed by the tumbling yen. A crucial difference between now and the 1990s is that many emerging markets have built up large foreign currency reserves that can be used to defend their financial systems in time of crisis. On the other hand, emerging markets are a much more integral part of the economy now than they were in 1998, so if there is a crisis it is unlikely the global economy can rely

on a booming US to save it once again. With the prospect of such turmoil once again caused by potentially violent reversals in capital flows, one question that should be asked is whether capital flows should be controlled? The benefits of capital flowing from countries with a savings surplus to countries that are short of funds for investment is undeniable. But this can be achieved while placing restrictions on shortterm changes in capital flows, often more based on speculation and sentiment than anything else. Externalities, a core economic concept, can help explain why the differing policies of national central banks are causing such uncertainty. When central banks implement monetary policy little account is taken of the consequences of their policies on the rest of the world, such as the effects of quantitative easing in the US on credit creation in emerging markets, or the impact of the recent devaluation of the yen on Japan’s competitors in world trade. So to avoid a repeat of previous financial crises some mixture of capital controls and global coordination of monetary policy is required. It is in times like this that the antagonism between an increasingly globalised world economy, and a still largely nationally based political system is most evident.

SPINNING OUT OF CONTROL J

RORY O'DONOGHUE

ust like Kim Kardashian's personal life, Irish water is the story that won't go away. There has been so much spin surrounding the creation of a Irish water as an entity that if we actually put something in Irish water that spun that much it would create enough hydroelectricity to power the country for a decade. For me there are two aspects to Irish water that are fascinating. Firstly, water charges and the creation of Irish water as a company was introduced in the previous budget. It is incredible given the amount of column inches and controversy it has created that it spent so long dormant. My second point of amazement is how poorly both sides of the argument have handled the issue. Time and time again the government has been given opportunities to make clear the situation surrounding Irish water and it has failed to do so. It has not been clear on its future ownership status, the composition of the company's board as well as being wholly unclear on the size of the ﬁrst charges. The morals of water charges have been dis-

cussed in numerous publications, I am interested in the communication breakdown surrounding this issue. Ever since Alistair Campbell and New Labour came to prominence in the public consciousness we have seen an emergence of some individuals attempting to do a poor imitation of their methods. At the same time we see other individuals supposedly seeing their methods everywhere. Most of what we see centres around what is known as "political spin". As we have seen political cynicism grow we have also seen political analysts and commentators increasingly view current affairs through the prism of spin. As Damian McBride, selfproclaimed spin doctor for Gordon Brown, put it; spin is not about lying. In fact political spin is about everything but telling a lie. Once we take this into the account, it makes it easier for us to interpret the political parties reactions to the Irish Water controversy. How Fianna Fail has attempted to

simultaneously support and condemn the measure has been both amusing and fascinating. However, in particular I am interested by Joan Burtons most recent statement that water charges will be under €200 for an average household of four adults. To my mind this is a perfect example of political spin. Once she made this announcement the headlines read that water charges will be under €200, which is accurately reporting the statement. However what fails to get reported is that this ﬁgure includes tax reliefs which are in fact entirely separate to the water charges. We also must examine what she means by "average". Average as a concept is open to varying forms of interpretation, what is average for you might not be average for me. In practice there might be very few average families out there, but if there are some families out there who have a water charge of €200 then she has not lied. Her statement has been reported as being applicable to everyone in the country yet in all probability this will not be the case. So what has

happened here is that Joan Burton has received good political coverage without changing the water charges or, most importantly, without lying. In short, it is fair to say that Irish water is not a controversy that will be dying down any time soon. From a communication point of view we can see that Irish political parties have still yet to become any more advanced at employing political spin. Nor have they made any great effort to further understand the Irish public. Well over 100,000 people marched against water charges with many more people opposed to the measure. This clearly shows that the government has not understood the level of anger. The more interesting question is how many of those hundred thousand people feel represented by any of the political parties. Until the parties themselves can answer this question, the polls will continue to show that Irish people are still undecided as to who they dislike more rather than who they prefer.

THE BULL OPINION

DRUGS AND THE DARKNET EOIN CAMPBELL

ust like almost every other business the market for drugs is moving online. Drug commerce over the Darknet appears cheap, fast and efﬁcient. This raises major questions on how it should and can be policed. Recently Europol announced the closure of Silk Road 2.0 and the arrest of Blake Benthall aka ‘Defcon’ allegedly the sites key operator. This comes a year after the original Silk Road and its ﬁgurehead ‘Dread Pirate Roberts’ were brought to a stand still. The recent closure was part of Operation Onymous, an unprecedented International Law enforcement operation. The BBC are reporting that 400 sites were closed down including Hydra, Pandora and the less subtly named Pablo Escobar Drugstore. Merely days before Operation Onymous I had decided to browse the Darknet out of curiosity. Surprisingly it was easy to get started (even with my minimal knowledge of tech). Marketplaces like Silk Road 2.0 are accessed through a Tor Browser, originally an open source project designed by the US Navy. Tor bounces your IP address around the world through different networks at a rapid speed effectively preserving your anonymity. Tor services are by no means purely used to gain access to shady marketplaces, they are of great importance to activists and whistleblowers. Targeting the Tor network itself is therefore controversial.

Within minutes I had Tor downloaded and found my way on to several marketplaces. This first thing that struck me was the rather uncomfortable familiarity of sites like Silk Road 2.0. The layout was reminiscent of popular online marketplaces like Amazon or eBay. An odd juxtaposition of products was available from the banal to the obscure. Although primarily used for purchasing drugs, you can pretty much buy anything. FIFA 15 is listed alongside cocaine, forged passports and vouchers for Tesco. The Complete Sopranos Boxset was listed as one of the top sellers. Even more surprising than the sheer amount of drugs available (there’s a lot, over 14,000 listings on Silk Road 2.0 the day I checked) was the customer satisfaction. In such a competitive marketplace reviews define a seller’s success. Nearly all of Silk Road 2.0’s sellers had average ratings close to 5/5. In any other industry ratings like this are virtually unheard of. If the ratings fall, buyers simply jump ship to one of the many other sellers on the site or on other marketplaces. This creates a ‘race to the top’ where users strive for quality in terms of product and service. Purity levels are much higher than offline markets. Several drug sellers promise that their employees have at least 4 plus years university education. Vendor mission statements sound like something you would expect from a start-up selling at a Farmers Market rather than on the Darknet. I found listings for ‘fair trade’ and ‘organic’ cocaine. One seller ‘HonestCocaine’ aims at cut-

ting out the middleman and cartels. They even have a slogan “Life may not be honest, but at least our cocaine is”. ‘HonestCocaine’ customer satisfaction: 4.94/5. The slogan may well have worked. It is worth contemplating whether this now online ‘war on drugs’ is practical. Online marketplaces eliminate the crime and gang violence associated with the buying and selling of illegal drugs. The power has shifted towards the consumer. Monopoly profits and cartels have yet to be realized. Furthermore, and perhaps more importantly, there is nothing glamorous or mysterious about buying drugs online. It’s as mundane as ordering a book on Amazon. This sobering purchase of drugs may not feel as appealing or alluring to many first time drug buyers. The online ‘war on drugs’ is going ahead however, and while Operation Onymous may appear a success, its prospects are bleak. When the original Silk Road was shut down the market proved adaptable, spawning dozens of copycats. This will likely happen again. Merely hours after site closure, Silk Road 3.0 was up and running. Two of the Darknet’s biggest sites Agora and Evolution remain unaffected. These sites along with others are being forced to innovate in order to avoid policing. Security operations and encryption are said to be much more sophisticated at Agora and Evolution. The financial system is becoming increasingly more complex. Tumbling Services, a form of laundering bitcoins, are

now widely available. Grams, a search engine for drugs includes ‘trending’ products and compares different marketplaces. Silk Road 3.0 will inevitably be closed for the same reasons as its predecessors but suppose attempting to police a site with no key operator. There could be a shift to decentralization of operations among markets. Without a ﬁgurehead like ‘Defcon’ or ‘Dread Pirate Roberts’, it would be far more difﬁcult to

seize a market. Once the admin cannot be policed law enforcement will likely target the individual buyers, something that has been socially detrimental historically in offline markets. The key priorities her are behavioural change and drug education is what’s needed not inefficient and scattered law enforcement. The ‘War on drugs’ is failing online as much as it is offline.

DIRECT PROVISION: IRELAND'S NEW MAGDALENE LAUNDRIES PADRAIG LANGSCH

ne particularly shameful cultural phenomenon exists in Ireland and has done so for some time – this country institutionalises people who are considered socially controversial. In the past it resulted in socially excluded children suffering abuse in industrial schools and single mothers being detained in one of Ireland’s many Magdalene Laundries. Whilst the inﬂuence of the Catholic Church has diminished over the years, the phenomenon has remained. More than 4000 asylum seekers in Ireland, including women and children, are kept in a government run system commonly known as Direct Provision. Entire families wait over 11 years before a decision is made about their claim for asylum.

In 2000, the government introduced direct provision without a legislative instrument. Its constitutionality is being disputed under Article 15 of the Irish constitution, Bunreacht na hEireann, which states that only the Oireachtas has the power to pass laws. Meanwhile, the courts in Northern Ireland held that the system does not promote the best interests of children. There is a common misconception in Ireland that asylum seekers take jobs which would have otherwise gone to Irish people. In reality, however, the law does not allow an asylum seeker to be employed and the lack of privacy and constant supervision in the system makes it almost impossible for asylum seekers to work illegally. They are provided with basic accommodation

in one of the centres, three meals per day and a weekly allowance of € 19.10 or around €80 per month - less than the monthly minimum wage in Mongolia. The conditions inside direct provision centres are often degrading. One of those centres is located in Foynes, Co. Limerick with six to eight beds per room separated only by curtains. Recently, a number of residents told the Irish Times about these conditions. They described insufﬁcient hygiene facilities, broken showers as well as the deteriorating mental state of some of the residents who spend their days talking to themselves and often don’t change their clothes for months. They are all mixed together – the good, the bad, and the sick -without any consideration of

an individual’s needs or of their differing cultural and social backgrounds. There is an urgent need to ﬁnd alternative solutions. One of them would be to allow asylum seekers to be employed while their application is being processed. The government should also facilitate naturalisation procedures for some residents. It is illogical and contrary to any sense of justice to deport young individuals who have spent years, often most of their lives, in Ireland inside direct provision, back to their countries of origin after their applications for refugee status are rejected. These people should, subject to the requirements of the Irish Nationality and Citizenship Acts 1956, be granted Irish citizenship.

The system is causing unnecessary hardship for refugee seekers. Many of them are highly educated individuals who could greatly contribute to our society if given the chance. Let’s not make the same mistake our ancestors made. Let’s not have another apology in the Dáil twenty years from now. In today’s globalised world, we have become so preoccupied with nationality and the colour of our passports that I fear we are slowly losing touch with the fact that we are, all of us, human beings before anything else.

Padraig Langsch is a former undergraduate student at TCD School of Law and is currently studying at University College Cork.

THE BULL FEATURES

MUSIC:

INDUSTRY IN TURMOIL

changed the music industry for better and for always”, is the claim made by Napster-founder Sean Parker (as played by Justin Timberlake) in 2010’s The Social Network. While Napster revolutionised the music business as a whole back in 1999, many would question whether it was really “for better”. We continue to hear claims that the music industry is dead; that illegal downloading and piracy are destroying the livelihood of artists, and that the era of CDs and records is behind us.

TARA JOSHI

It’s an ongoing debate, but as the tussle between modern technology and the music industry continues, one has to question why it has persisted for so long. After all, every business has endured unprecedented challenges with the growth of the Internet, and we stand in an era where we expect information to come to us for free. If that is the case, should it accordingly be the same for the arts? Music as a commodity is hard to quantify by a monetary value in itself. When we buy physical albums and singles, it is ultimately the actual object we are paying for, not the music, and while audiophiles still buy physical records, it is perhaps a medium in decline. If you can buy an MP3 on iTunes for 99c, then artists can’t be making much from their actual music. Digital royalties are practically negligible – a 2010 survey in America estimated that artists got about nine cents from a ninety-nine cent track

on iTunes. For small-scale artists, the purported prime losers from piracy, the music industry is a dubious champion. Streaming is held up as a lesser evil than illegal downloading. Yet ostensibly-noble services such as Spotify are, ultimately, about as useful to artists as iTunes or just all-out piracy, monetarily speaking; perhaps less-so, given that in 2011 it was estimated that it would take 200 streams for an artist to equal the royalties from one iTunes download. Taylor Swift’s controversial recent decision to withhold her latest album, 1979, from Spotify was seen by some as a greedy move, but this is rather cynical. Instead, it serves to highlight how much we take our ability to hear music for free as a right. It is hardly as though the doomsday predictions of the death of the music industry have transpired, however. Free MP3s have been available for years now on an increasing scale, but people still stump up cash. The charts, though full of often quite questionable music, still exist, and there is still hotly fought competition. One has only to look at the enviable sales of Adele’s Twenty-One or, more recently, Royal Blood’s self-titled debut, for it to become apparent that people are still buying music on a big scale. Even artists lacking Adele-style record sales are making a living. The reason for this is that the majority

of musicians don’t make their cash from music at all now, but from touring and selling their own merchandise. It is telling that in spite of Twenty-One being the biggestselling album of 2011, Adele was only ranked as the tenth highest earning artist of that year, having had to cancel tour dates due to throat surgery. If you really want to support an artist, then spending 99c on a track makes barely a dent, as compared to seeing them live or buying a t-shirt. Doing something different and a bit more personal is a way for artists to make ends meet too, with Lucy Rose selling her own-brand tea, while Dublin’s own Princess have been selling Tsingles – limited edition t-shirts with a download code for their new track. A piece was published in the New York Times recently describing the increasingly corporate nature of the music industry with stages at festivals sponsored by the likes of Samsung Galaxy and Honda. More recently still, underground darling FKA twigs became the unlikely face of Google Glass. There was a time when this all might have been considered “selling-out”, but artists need to earn somehow, and for all of Taylor Swift’s earnest romanticism about not entrusting her life’s work to Spotify, for most artists earning from their music alone is a naively optimistic sentiment in this day and age. Perhaps all this means that, in the future, artists will increasingly opt

for the approach taken by Radiohead for In Rainbows, asking fans to pay whatever they deem fit for the digital album. Music’s value, as with all art, is entirely subjective; as such, perhaps it would be best to let the consumers reward their favourite music accordingly. Yes, some would pay nothing. But if someone is interested primarily in trying before buying anyway, then they are surely just as likely to illegally download the music. Radiohead didn’t make a loss with In Rainbows, but then again they are very much an established band. Girl Talk admitted that thousands of people downloaded Feed the Animals for free back in 2008 under the same, pay-what-you-want scheme; however, he did ultimately profit from the venture, and has continued to sell his albums in this way. With the future of the music industry still in flux, it seems foolish to focus so heavily on record sales alone, and the majority of new artists will have to move away from that old model. For now, shows, merchandise and, ultimately, some kind of corporate sponsorship, are the most lucrative revenue-generators for artists. But perhaps something unprecedented like Napster might yet come in and shake things up once more. That Cheryl is the first British woman to have five number 1 singles is perhaps a sign of the bell-tolling on the music industry - but we must try and remain optimistic.

THE BULL FEATURES

UKIP

FARAGE, FALLACIES, FACTS

GEORGIA KNAPP

he dramatic sweeping success of the United Kingdom Independence Party during the May 2014 European elections sent shockwaves across the European Union. As its name suggests, the main aim of the UKIP is complete separation from the EU, and on the basis of its newfound popularity, these aims are clearly shared by a large proportion of the British populace. But is this wave of antiEuropean sentiment here to stay or merely a ﬂash-in-the-pan amidst disillusionment within the British political system? And is there any truth to the ideology propagated by Farage and his followers? UKIP was birthed in the political debate and opposition to the Maastricht Treaty in 1993. Their founder, Alan Sked, started the party with the intention of it being a persuasive voice against the UK’s membership of the European

Union, but left the organisation after the 1997 General Election. Sked is quoted as saying his party contained members who are “racist” and “infected by the far-right”. Criticism of perceived racism and xenophobia of party members has not waned since then, and their rampant nationalism has led to illogical tirades and theories. Their ﬁrm declaration to “Remove the UK from the jurisdiction of the European Court of Human Rights” is currently sitting snugly under the ‘Safeguard Against Crime’ heading on the Issues section of the party’s website, on the same list as “no cuts to front line policing” and a call for tough punishments. Who’s to say what other conventions and treaties UKIP will seek to renege on? Is there no place for human rights in Farage’s perfect nationalist United Kingdom? Although state sovereignty, eco-

nomic concerns and legal systems are hot topics in UKIP’s manifesto, immigration is the real thorn in the side of the right-wing wave currently present in our nearest neighbour. David Cameron and the Tories have been in the news lately for suggesting opposition to the free movement of citizens’ policy of the European Union, but Nigel Farage and his party advocate a much stricter immigration system. To UKIP, immigrants are seen as a drain on society, aliens who serve only to suck the land’s lifeblood without giving anything of note back to their new home. However, a recent study by the University College London has proved precisely the opposite – European migrants contribute over £20 billion to the British economy, and their contributions in taxes far outweigh any welfare claims. The majority of migrants from western and southern Europe hold university degrees,

and the UK currently has the highest level of skilled, educated immigrants in the EU. The study has also shown that these migrants are better educated than the British workforce and are much less likely to avail of state beneﬁts. As recent approval ratings polls demonstrate, support for the ‘Big Three’ parties in Britain is fractured. In times of political unrest, it is usually the more extremist ideologies that gain traction within the electorate, and a blatantly Eurosceptic party winning the greatest number of votes of any British political group in the European elections is simply stunning. However there is an insidious danger within the party’s views and the rippling undercurrents of xenophobia cannot be ignored, and it is a rhetoric that we as Britain’s closest neighbour should be more concerned with.

THE BULL EDITORIAL

EDITORIAL: LIES, DAMN LIES AND STATISTICS CALLUM TRIMBLE-JENKINS EDITOR

t's the economy, stupid’ is perhaps even more relevant than when it hung on the wall of Bill Clinton’s campaign headquarters over 20 years ago. In a Midterm election that lacked a standout issue voters up and down America described unemployment as their most important worry. With employment growing at over 200,000 per month for the last nine months, a record high since Clinton’s day meaning that unemployment is at its lowest rate since July 2008 surely we should have been expecting a strong Democratic showing. Perhaps they would ﬁnally be able to control the House and end the deadlock that has hamstrung the Obama Administration. However the reality was the complete opposite, a Republican surge that seized a majority in the Senate ensuring control of both Houses of Congress and with it the President’s legislative agenda. They also managed to hold on and make gains in a series of tight gubernatorial races showing dissatisfaction

with the White House at a local level as well. Surely this is a paradox, the voters care most about the economy and the economy is growing yet they vote against the party in power? This is not just an American phenomenon, in the UK the latest YOUGOV poll still gives Labour the lead over the Conservatives despite unemployment falling below the 2 million mark for the ﬁrst time in six years. This is also the case in Ireland where despite signs of recovery including exit from the bailout and an anti-austerity budget a recent poll done for the Sunday Independent gave Sinn Fein a four point lead over Fine Gael. It may be tempted for some to conclude that the importance of the economy has been overstated by pollsters and journalists but this would be a massive mistake. Exit poll data shows that in states such as Arkansas, Colorado and Virginia where Democrats lost or almost lost senate seats the economy was considered twice as important as any other issue, domestic or foreign. This trend continued across the board and it was the voters

who were most concerned with the economy that favoured the Republicans by the widest margin. An important aside is that Republicans should not take this as a sign that they are more trusted on the economy than their Democratic rivals. National Exit Polls suggest that the Republicans’ unfavourables are actually slightly higher than the Democrats’. Therefore this result should be seen as a rejection of the Administration’s policies rather than support for the Republicans’ agenda. We are still left as to why the economy is growing yet support for Obama is falling. The answer is simple, headline statistics make too many generalizations to tell the whole story. Yes the economy is growing as a whole but this is failing to materialize for ordinary Americans. Many are angered to see corporate proﬁts soar while wages have remained stagnant. There has also been a lack in growth in house values since they crashed in 2008, with much of individual voters wealth (and debt) tied up in their home this of particular concern.

If we take Maryland as a prime example, many voters expressed their anger at a tax increase which further reduced their already low disposable income. They blamed Democratic gubernatorial candidate Anthony Brown for his role in the previous Martin O’Malley regime in which he served as Lieutenant Governor. This saw a solidly blue state elect only their second Republican to the State House since 1969. Although this is on a state level it was replicated at the national level as well. The key lesson for leaders including our own is that although there may be economic growth voters (even those with jobs) are still scared of what the future holds. The current squeeze has meant that they have little left after expenses to use as precautionary savings leading to increased uncertainty and fear which has been taken out at the ballot box. What does this mean for 2016? Surely it is a warning against a Clinton coronation? In fact it is not as bad for the former First Lady, Senator and Secretary of State as

some have suggested. She is in a unique position to appeal to the voters that the Democrats have lost simply by following the precedent of an earlier Democratic President. That President? Her Husband. Bill Clinton built and maintains a following amongst this group of largely white lower middle class Americans when he delivered on an economic message they understood and supported, whether his wife can use that to his advantage is a key question in the race for the White House. The US Midterm Elections 2014 have as is usually the case at such contests raised a number of intriguing points regarding the next presidential election in 2016. However there is one conclusion that we can take from it, headline statistics aren’t enough for the electorate. They don’t care that the economy as a whole is growing by some many percentage points unless they can feel it for themselves. It is this that explains the paradox President Obama and the Democrats suffered from.

EOIN O'NUALLAIN

UBER: MOVING PEOPLE

oving People’ – That is the catchphrase of Uber, a company that was described by Joan Miller, spokesperson for Summit Partners, in June as ‘one of the most rapidly growing companies ever’. And this statement is true The Company, renowned for its innovative approach to the provision of taxi service and Hailo’s primary competitor, has been valued at as high as $17bn. Having been bolstered with over $1bn worth of cash from big names such as Google Ventures ($258mn), Blackrock ($175mn) and Fidelity Investments ($425m) it’s no small wonder that Uber has an appetite to expand. With ambitions to expand further in Asia, Latin America, eastern Europe and Africa, as reported by the Financial Times, it would appear that Uber is well on its way to world domination. It hasn’t all been plain sailing however. Seemingly since day one Uber has been facing both regulatory and legal battles due to the nature of its service. The basis for their arguments is that the criteria that one must pass in order to become a driver for the Silicon-Valley startup would appear to be quite stringent. Essentially the only test to be passed in order to become a driver operating via its ‘ride-sharing’ service is that of a minor background check which, in many regulators’

eyes ‘poses safety risks and skirts regulations that licensed taxi drivers must adhere to.’ As a result of these concerns, on September 2nd, Uber found itself facing a countrywide ban in Germany. Although this ban was lifted midway through September (it was upheld in Berlin and Hamburg), it as faced widespread criticism regarding the issue of ‘ride-sharing’, a system whereby one-time shared rides can be arranged on very short notice, and has even become the target of protests in London. Add that to current struggles in India, Korea and even negative comments being made in its home of California, it is fair to say that Uber has seen its fair share of roadblocks. Not that Uber is showing any signs of slowing down. On October 21st, Uber announced plans to launch ‘UberXL’, a system that will accommodate six and eight-seater cars in the UK. This is sure to place increased pressures on rivals such as Hailo, whose chief executive Tom Barr recently announced the company’s plan to pull out of North America entirely. This should be seen as a huge victory, and proof that Uber has the power to overcome its regulatory battles. Uber is also in early talks with investors about raising another $1bn in equity, which could potentially see its valuation rise to a massive

$25bn. Even further to this, with Uber clearly winning in both the areas of growth and market value, when compared to its rivals, it has also showed feistiness and doggedness in its encounters with German regulators. Having fought to overturn the original countrywide ban, it is now facing off with the two remaining holdout cities as previously mentioned: Berlin and Hamburg. By reducing fares from €1.60 to €0.35 per kilometer, Uber will be allowed to offer a ride-sharing service without a passenger transport license. While this will of course damage proﬁts greatly, it is a move that must be greatly respected. Whether you like it or not Uber isn’t going anywhere fast – ﬁguratively speaking, of course.

THE TRINTERNSHIP DUBES and our sponsors EY are launching the annual Trinternship Competition from the 3rd – 5th December. This is a university-wide contest to ﬁnd Trinity’s brightest and boldest students with the best business acumen. Each team is comprised of four members, selected from each faculty (e.g. Business, Law, Engineering, Science etc.). Only one team will remain standing after they tackle their appointed Case Studies. EY partners will be the judges who will have the ﬁnal say on the Chosen Ones. The most outstanding candidate overall will receive the grand prize of an EY internship for 12 weeks this summer. The winning team will be invited to EY’s Insight Week- a precursor to the company’s summer internship programme. Furthermore, each member of the successful team will receive a voucher for Chapter One restaurant.

Apply now using these headings for your application form: Name Course Year Reason you should be involved in the Trinternship (max 250 words) Attach you CV

Please send it to dubes@csc.tcd.ie to be considered for this competition. The closing date for applications is Thursday the 27th of November.

Visit https://www.facebook.com/Trinternship for updates.