Hello fellow Northwestern students. This is ISBE President Nate Prince. I speak for myself and everyone in the Northwestern Institute for Student Business Education, ISBE, in expressing our excitement about the new, digital, Northwestern Business Review. I’d like to kick-off my section with a rundown of some key macro events I’ve experienced and read about this past summer. Additionally, I have some tips on interning.
First, my two cents on the Eurozone debt crisis. Since Goldman Sachs coined the acronym ‘PIIGS’, referring to the nations Portugal, Italy, Ireland, Greece, and Spain, a microscope has been on these sovereign powers. It should be immediately noted that these nations have not coincidentally been given a name likening them to the portly pink creatures- they are literally ‘piggish’ insofar as being deeply in debt, having poor fiscal austerity, and generally being a deterrent to Eurozone growth and sustainability. The eyes of the world are on Greece, and while the same can be said about France and Italy, Greece is particularly unique with exorbitant amounts of citizens paying no tax and too small GDP, based largely upon tourism, to legitimately sustain their financial predicament. Naturally the anti-PIIG Germany, is now at the forefront of a broader discussion regarding “saving the Euro”…the question remains of who will do so, and more importantly how. Greek citizens can be seen protesting in the streets of Athens and elsewhere around the nation, while everyday Germans, as well as some political factions within the German government, are starting to truly push back when it comes to fiscal austerity. My prediction? Greece will default, the entire Eurozone will inevitably fall further, and Ireland will be taking front-page space all of next summer. While I believe Angela Merkel of Germany intends on maintaining the Euro, and levels of peace and unity unseen since the end of World War II, I believe this will come down to “Euros and cents.” The International Monetary Fund and the European Central Bank will not be able to quell this crisis, pushing modern industrialized nations further along the path of “the new normal”- higher taxes, little to no growth, and ordinary citizens fronting the bill for decades of uncapped government spending. Given this lively and optimistic analysis, I now turn to two nations, one very large and the other quite small- the United States and Switzerland.
I believe that we Americans are also ushering in an era of “the new normal”- absorption of private sector debt by government entities, spurring little to no growth for the next 2-4 years, higher taxes for all, and political rhetoric that will get us nowhere. Our federal government is now at the intersection of discussions surrounding fiscal policy, monetary stimulus, and so-called “class warfare.” I think that we are in for a real paradigm shift. I do not think we are on pace for a Greek-esque catastrophe, but I do believe we will all have to eat the ancillary effects of this economic low for the foreseeable future. Once again, like in the Eurozone, the correction of our national economy will undoubtedly boil down to two questions- “who” and “how.”
Why am I not as afraid about America as Greece? Because following an S&P downgrade, new US Treasury auctions, as well as outstanding Treasuries, saw all-time low yields as prices skyrocketed. Logical? No. But that’s because “the market” has told Americans that even at our worst, America is still a safer bet than nearly all sovereign Treasury and currency options. Also seen as a safe alternative, the Swiss Franc (CHF) saw an all-time high as investors flocked to the tiny nation’s currency. I saw the effects of this while working in Sales & Trading at UBS. Both instances represent economic irony. S&P’s downgrade of America’s creditworthiness was inherently negative, yet it caused a positive outcome for our federal government insofar as causing Treasuries to be more sought after than ever, pushing borrowing costs extremely low. In Switzerland’s case, it seems inherently positive if the nation is viewed as a safe haven, yet there are negative implications of a strong currency. The unreasonably strong Swiss Franc, coming as a result of perceived currency safety in Switzerland relative to the Eurozone in particular, actually hurts Swiss businesses. Revenue streams abroad must be converted into Swiss Francs domestically at such high exchange rates that profits become eroded relative to normal market conditions. Therefore the growth prospects for other Swiss firms including Credit Suisse, Swatch, and Nestle are collectively at risk because their homeland is safe. This irony has now forced the Swiss National Bank (SNB) to take action in the form of exchange rate manipulation to help spur continued profitability for Swiss-domiciled firms.
Finally, I’d like to offer three pieces of advice regarding interning.
1) Read as much as you can, and more than the guy or girl sitting next to you. This is one of the only ways to differentiate yourself, especially when surrounded by the type of talent us Northwestern students get grouped with. Once you’ve got the information, play your hand wisely…be the first to listen, the last to speak, and don’t be afraid to give an answer.
2) Don’t be afraid to be a human being. You’re supposed to be a 20-21 year old, you should have hobbies, and you don’t just need to study Economics to make it on Wall Street. We go to Northwestern- nearly any department or major we choose will align us with incredible professors and give us the soft skills needed to synthesize information, form opinions, and communicate ideas. Examples of the various routes to success include Andrew Mason who founded Groupon, the fastest-growing internet company of all time, after graduating Northwestern with a major in Classical Guitar. Bill Gross manages hundreds of billions of dollars for the largest bond fund in the world, PIMCO; he majored in Psychology at Duke. Lloyd Blankfein, CEO of Goldman Sachs, and Roger Goodell, Commissioner of the NFL, both started as interns, eventually rising to the top-spot. Successful people do not come in any single form however the indisputable constant remains hard work.
3) Take smart risks. Reach out to as many people as you can in the firm where you’re interning. If there is an intern speaker event, send a quick thank-you email afterwards. Go up to senior managers, their secretaries, or anybody who can help you build connections. As cliché as it sounds the worst that can happen is he/she says “no.” Don’t accept the status-quo or be complacent falling by the wayside of what you deem to be “the normal standard” of your intern class…if you do, chances are you’re not going to receive a job offer. Distinguish yourself and work harder than everyone else around you. Ask questions and don’t be afraid of not knowing something. When you find out your answer, help your other interns and full-timers will take notice. While you want to be the best, you also want your team to be the best. Pay it forward.
Hope to see everyone on campus soon. Fall 2011 should be great.
Until next time, Nate Prince.