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The News That Shaped the Month – November 2016

UvA Recap – by Daphne Sweers

Facilitated by the University of Amsterdam, the Democratisation and Decentralisation Committee will have an advisory referendum on its proposals from 23th of November until the 11th of December. Many of you will recall the protests in 2015 and eventually the occupation of the Maagdenhuis, which reflected a high degree of discontent concerning the level of democracy and decentralisation of the University of Amsterdam. As a result, the Democratisation and Decentralisation committee was established to examine and develop new organisational models to combat this discontent and, of course, to stimulate democracy and decentralisation. In the referendum, you can vote on three different aspects:

  1. The level of desirability of a ‘new style’ senate

  2. The level of desirability of a charter displaying the core values of the university

  3. Four different governance models, each in their own way overcoming the aspects that caused the protest:

The green self-organising university, where the involvement of staff and students will be according to levels of self-government.

The yellow participatory university, where boards consisting of staff and students can determine the policy of the university. Involvement thus is according to a representative democracy.

The orange dual university, where the current governance model is adapted by extending and reinforcing the role of the current representative bodies to increase the involvement of the entire community.

The blue existing university, which is most similar to the current governance model. However, small adjustments in the governance structure and culture will be made.

As mentioned, you will be able to cast your vote in the weeks to come so make your vote count!

If you want more information on the referendum, on Wednesday the 23rd of November we will publish an extensive article about it, prepared for you by Raffaele Di Carlo. Business Recap – by Nando Slijkerman

Trump, Trump, Trump – what was more important than the presidential elections this month? The elections had an unexpected impact on the financial markets. After Trump’s election S&P 500 dropped below sea level but later that day it surprisingly rose and eventually closed with a positive index value. A possible explanation might be that investors were waiting for the dip in order to enter the money-train and speculated on an increase a couple days later. After it was known that Trump would be the new president of the States, Heijmans (small-cap Dutch local infrastructure company) rose 11%. Maybe investors believe that Heijmans is going to build the wall between Mexico and the USA…

Let’s look at the numbers of November. S&P 500 rose 2.37%, AEX increased by 0.15%, and the DAX increased by 1.22%. Deutsche Bank seems to be the biggest creditor of Trump, and Ahold Delhaize begins its merger with growth which resulted in a relative sales growth of 2.6%. Operational profit increased by 1.0% to 425 million Euros in the third quarter. Brent Oil dropped 9.4% to $46.63 barrel.

ABN AMRO advisers falsified signatures. Unbeknownst to the clients they have copied signatures to close a mortgage file. In some way, this did not influence the stock price because ABN AMRO rose 4.3% this month without extreme volatility.

All in all, a positive month on the markets.

Black Friday – by Brunno Fontanetti

Black Friday or, as every non-American likes to call it, the day when most funny YouTube videos of the year are made, is getting closer as the year almost reaches its end.

The holiday was actually created by stores that realized this day was usually the break even point of the year. Since accountants wrote losses with red ink and positive balances in black, the break-even point day became the Black Friday. However, nowadays, the holiday has a different significance: from huge lines in the entrance of stores, to poor families getting store loans at strikingly high interest rates, Black Friday shows capitalism at its worst.

The day has caused quite a lot of issues in the US. Last year, for example, Walmart had workers walking out the store in the middle of Thanksgiving, protesting very long shifts, and bad financial compensation for working on a holiday. Moreover, since 2008, in the US alone, more than 5 people have died and dozens got injured during the holiday, leading to a simple question: is it worth sacrificing everything in order to consume? Economics Recap – by Yana Chernysh

Since Brexit UK rates have been changing crucially. In November Consumer Price index (CPI) in the UK has fallen to 0.9% despite the prediction of growth by the economists, who predicted it to rise to 1.1%.

Moreover, the pound has fallen 16% against the dollar and 11% against the euro since June. However, the economists do predict the growth of CPI coming soon. Another prediction made for the next months is a high and constant growth of the interest rates.

Eurozone new system of budget oversight has been published. Several countries (Italy, Spain, Portugal, Belgium, Cyprus, Lithuania, Slovenia, and Finland) were warned by the EU that their spendings may violate the rules assigned by this system and are advised to ensure that they will meet the EU targets. In the assessments, stricter fiscal rules for countries were introduced as well, in order to keep public debt under control. This was made as a response to the recent sovereign-debt crisis.

Crude oil price is still dropping (now being 46$ per barrel), because of the oversupply of oil. An IEA energy group predicts the boom and bust cycle for the oil industry. Investment in new oil supplies is at its lowest since 1950, which can mean that industries project approvals will remain low for a third year in a row. This, in turn, will lead to a big difference in supply-demand function, with no incentives to be matched anytime soon without starting a new boom and bust cycle. 2 Million Dollar Bribe in Russia – by Yana Chernysh

A huge scandal took place in Russia. On the 14th of November, Russian Economic Development Minister Alexei Ulyukayev was accused of accepting a 2 million dollar bribe, for giving assessment and benefits to one of the Rostneft deals. It is said that he threatened the company in order to receive the money. The deal was connected with the support of privatization and Rosneft buying around 50% of shares of Bashneft, both being huge oil companies in Russia.

Ulyukayev has been in politics for 25 years and became the Economics Development Minister in 2013. He himself was referring to corruption as a serious issue for the economy and the whole country and demanded actions in order to lower the level of corruption in Russia.

It is the first time in Russian history when a federal minister is being arrested for corruption.

Although Ulyukayev was caught red-handed while receiving a bribe, Russian government says that this case needs very serious proof. Ulyukayev can face a prison sentence of 8 to 15 years, if the investigation renders him guilty, as well as a fine and a ban on holding some public positions. India’s Currency Ban: the Nation’s Biggest Strike Against Black Economy in Four Decades – by Tsz-Tian Lu

After a surprising announcement on the night of 8th November, India’s most commonly used notes, 500 (about 7 euros) and 1000 Indian rupee bank notes, became worthless just overnight. From 10th November until 30th December, the new 500 and 2000 rupee denomination notes are replacing those removed from the circulation. Following a tax evasion amnesty early this year, which successfully disclosed billion unaccounted assets and income, this strike is by far the India’s prime minister Narendra Modi’s biggest measure to fight against black money.

According to the official data, more than 334 billion U.S. dollars earned through illegal activities were ‘evaporated’ from the economy from 2002 to 2011. Thus, the main targets of the sudden action are to crackdown undeclared cash, eliminate fake currency notes and curb corruption. If the targets are successfully hit, the government estimates that billions of cash will be brought back to the financial system, and it will be much tougher for the financing of terrorists since their income severely depends on illegal transactions. Moreover, in the short-term, a deflationary impact in general is expected as cash transaction come down, thus resulting in moderate real estate prices.

Although part of the intentions behind this action is to relieve poverty, some argue that this is actually hurting the poor. India is an extremely cash-driven economy, where 98% of the consumer transactions depends on cash. Furthermore, 500 and 1000 rupee bank notes together count for more than 86% of the cash in the circulation. Now, with almost 86% of cash invalid, the central bank cannot meet the pace that people are requesting to exchange their banknotes, and it even turns out that the new ones are incompatible with the existing ATM machines. People who live in the rural areas find it very difficult to exchange their cash and, sadly, there are cases of people committing suicide or dying from heart attacks because they misunderstood the information and thinking that all their money is useless. The inconveniences and sad news show that the government is not thoughtful enough on its planning. “Cooperate with me and help me for 50 days, I will give you the India you desired.” says Modi. Well, time will tell whether his decision was right. Failed Merger Between PostNL & BPost – by Michel Mijlof

The biggest postal companies of the Netherlands and Belgium, namely PostNL and BPost are facing a possible merger. PostNL is traded on the AEX index while BPost is traded on the BEL-20 index. In the last month, BPost offered a bid of €2,825 and 0,1202 stocks per PostNL share. This would amount to approximately €2,5 billion. If PostNL accepts this proposal, they will go further into the merger negotiations. However, PostNL rejected the proposal of BPost.  Reasons are that PostNL has confidence in themselves for the future. Moreover, the bid of BPost is too low and too risky for the current shareholders of PostNL. Another – non-financial – reason is that the Belgian government owns 51% of BPost and, if the merger succeeded, this would decrease to 40% of the merged company. The Dutch Minister of Economic Affairs, Henk Kamp, is also questioning this takeover and is asking the Dutch government to stop this merger from taking place. All these news about the merger have had a great impact on the stock price. To illustrate, PostNL stock price went up from €4,292 to €4,885 and back down to €4,440 within 3 weeks. Politics Recap: What Has Happened Around the World When We Were Focused on the U.S. Elections? – by Magdalena Wiśniewska

On November the 1st, Iraqi forces have entered the City of Mosul occupied by the ISIS forces. It caused thousand of Iraqis to flee their homes. The mission to reclaim the city is predicted to last for weeks, if not months.

On the 3rd, approval of Brexit by the Parliament was adjudicated by the High Court, granting a delay in the execution of the process. The Prime Minister, Theresa May, might be forced to cooperate with the Parliament and to prepare and present a plan concerning the future of the Great Britain after leaving the EU. The matter is not yet fully resolved, however, as she has appealed the decision.

On November 7th, China has banned two candidates, who are in favour and advocate for Hong Kong independence of China, from gaining seats in the legislature. This shows Chinese limits on tolerance and the limit of the ‘high degree of autonomy’ that China promised Hong Kong.

South Korea’s Park Geun-hye, who was accused of influence-peddling scandal, has offered to give away her power, as Park’s support has fallen sharp to barely 5%. You can read more about South Korean situation in Dave’s article. Ushering the Third Republic – by Raffaele Di Carlo

2016 seems to be the year of controversial politics and even more controversial referenda. While British politics are still struggling to recover from the results of the Brexit referendum, which hints at a possible future schism between the United Kingdom and the European Union, and the United States deal with the results of their latest presidential elections, yet another country calls its citizens to the polls. The country is Italy, which might be off to a historical constitutional reform, should the referendum scheduled for December 4th succeed.

One of the core points of Prime Minister Matteo Renzi’s agenda since the start of his mandate was to streamline the legislative process in order to make the country more stable and responsive: the current system of interaction between the Chamber of Representatives and the Senate is seen as too cumbersome and time-consuming. He also took on the very sensitive issue of reducing the maintenance cost of the political system. In an attempt to tackle both issues at once, the reform plans to reduce the number of Senators by more than a half, while shifting the Senate’s jurisdiction on regional and territorial affairs and letting the Chamber handle the common administration.

The proposal has raised much concern, especially by the Five Star Movement, which claims the reform is nothing but an authoritarian turn of the government and that only the two-chambers system ensures a democratic legislation. Certainly, the outcome of the referendum in December will decree whether the country can be ruled by the current administration or not, as a failure might represent a significant loss of confidence in the government. New Zealand Startled by Another Earthquake – by Leonie Ernst

On the 14th of November, the people of New Zealand were startled by a severe earthquake with a magnitude of 7.8 on the Richter scale. Since the country is located on the border of two tectonic plates, earthquakes are quite common. The country therefore regularly suffers some light earthquakes, which are mostly not noticeable. However, this time the magnitude of the earthquake was the largest in decades. The earthquake caused a landslide, whereby the two islands have come to lie about two metres closer to each other. The damage caused by this drastical landslide runs into billions of dollars. According to prime minister John Key, it will take months before the country will be totally recovered from the shock. Especially railways were hit by the earthquake. Fortunately, the earthquake was heaviest in a sparsely populated area – 100 kilometres north of Christchurch – so not many injuries were caused by the earthquake.

After the heavy shock, some lighter shocks followed. The tectonic plates are still moving and causing some of these light shocks, but these do not have negative consequences for the people. Due to the healthy financial situation of New Zealand, all the damage will be recovered as soon as possible.

2016 BRICS Summit – by Hải Đăng Vũ

BRICS (initials for Brazil, Russia, India, China and South Africa) is an annual event, where some of the most prominent and authoritative representatives of the global economic and political forefronts meet together to coordinate a comprehensive agenda relating to economic expansion, political integration and sustainable development. This eighth gathering was organized in the city of Goa, India.

Slightly in contrast to the preceding years, when conversations were geared towards a convergence of establishing a mutual strategy for member countries, the primary theme of this year’s meeting was revolved around the combat of terrorism, mostly due to the India – Pakistan territorial dispute earlier this year. It was also widely recognized that  China was believed to implicitly endorse Pakistan terrorist groups to expand more of its influence in the region. During the meeting, India called Pakistan a “mothership” of terrorism and severely criticized China as a platform of “artificial and self-serving grounds”.

Asides from comments on war on terrorism, the summit also focused on more relevant issues, particularly on reinforcing common economic growth within member countries, with respect to the fact that economies of all BRICS countries have underperformed throughout the entire year. Formal agreements on the utilization of technology, energy usage and health-improving measures were also agreed upon by members as well.

In order to increase its international recognition, the summit of this year also exhibits its first trade fair, film festival and football tournament. 2016 US Elections – by Artur Rymer

In case you have been cut off from the world for the last two weeks, United States of America has a president-elect – Donald Trump. Following one of the most… exciting election seasons in the US history, despite most predictions and polls, Donald Trump was able to win at least 290 electoral votes, more than 270 needed to secure the presidency. However, the candidate who has received the most votes across the country was Hillary Clinton (you can read more about that and the Electoral College in Michael’s piece below).

Other than the presidential elections, American also elected all 435 members for the House of Representatives and 34 of 100 members of the Senate. Republican Party was able to secure majorities in both, meaning that, together with Donald Trump, they will soon fully control both the legislative and the executive branches of the US government and, with the imminent appointment of at least one Supreme Court judge, they will influence the judicial branch for the years to come.

Additionally, several states had additional votes on laws related to legalisation of medical or even recreational use of marijuana (8 states approved it, 1 state rejected it), the minimum wage (4 states approved increasing it, 1 state rejected reducing it), state healthcare systems, introducing new gun ownership restrictions (3 states approved it, 1 state rejected it) and abolishing death penalty (3 states rejected it). Electoral College Debate Erupts… Again – by Michael van Rhee

Donald Trump’s surprise victory in the US presidential elections stirred up a wide range of emotions in the United States as well as the rest of the world. Numerous protest marches were seen all across the country, and an age-old debate — the one about the Electoral College’s role in the elections — was brought up yet again. Originally created to give more weight to votes from the smaller states, the Electoral College has been at the heart of debate since the start of this millennium, when Al-Gore lost to George Bush despite winning the popular vote in the year 2000. Similarly, Hillary Clinton fell short of the presidency by just a few hundred thousand votes in swing states, despite receiving 1.5 million more votes nationally. The fact that Trump still won the elections has caused outrage among Democrats. There’s a fair point to be made here, because the winner-takes-all principle that applies to the elections can be thought of as undemocratic in itself. After all, if you’re a Democrat living in redneck-dominated Texas, your vote is essentially lost in the process of applying that same principle. The same goes for Republicans living in, say, California, which has been a Democratic state in the last several elections. Abolishing this principle would also get rid of ‘swing states’ altogether, thus making the elections a lot fairer. It can ultimately only be a good thing, but if there’s one thing that’s predictable about the US, it’s that it keeps surprising you. Sigh, let’s see how this one unfolds.


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