Knowledge at Wharton

Groupon -- from the words ”group” and ”coupon” -- negotiates deeply discounted deals with businesses and alerts its legion of e-mail subscribers to the offer. Since its founding in 2008 Groupon has amassed 25 million subscribers in 29 countries and a host of competing sites have crowded the market hoping to tap into the potential of ”social” commerce. But are group buying sites just a passing fancy? And what should they do to stand out from the pack and achieve long-term sustainability?

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Members of Generation Y -- a group of approximately 70 million young people between the ages of 15 and 30 -- are starting their careers in perhaps the worst job market since the Great Depression. Experts say the experience creates both immediate and long-term negative impacts including lower salaries now and in the future. And while their reduced spending power is not expected to have a lasting drag on the U.S. economy it does have significant repercussions for how these young people conduct their adult lives and careers.

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Using tax credits low-interest loans and grants the Obama Administration reportedly plans to invest more than $50 billion in electric vehicles renewable energy and a host of other clean technology -- or ”cleantech” -- ventures by the end of next year. But to what extent is today’s fast-paced investment in cleantech a victim of irrational exuberance and the herd mentality often associated with venture capitalism? Quite a lot say experts at Wharton and in the larger investment community.

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The U.S. housing market has been wobbly for several years but it has shown some signs of perking up in recent months. The latest reports however indicate a setback with median home prices dropping slightly and sales well below the already depressed levels of 2009. Yet a combination of low mortgage rates and apparent home-price bargains should still be drawing some buyers into the market. Knowledge at Wharton spoke with Wharton real estate professor Susan M. Wachter about the housing market’s slow recovery the prospect of another sharp dip in prices the effect of foreclosures on the economy and what it will take to get the market back on track.

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France expels Roma Gypsies; a prominent German economist says migrants are destroying the country; a far-right party with an anti-immigration platform wins its first parliamentary seats in Sweden. Few countries in Europe have escaped the recent heated debates about immigration within their borders. Against this backdrop a growing body of research is helping Europeans understand whether and under what conditions immigration is economically and socially beneficial. As one Wharton expert notes ”It’s not a zero-sum game.”

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Faced with the possibility of a global currency war Western countries are increasing their scrutiny of China’s currency policies accusing Beijing of intervening in the markets to keep China’s currency weaker than it would be otherwise. In the U.S. politicians and regulators say such tactics undermine efforts to boost exports and thus take away jobs from American workers. But the controversy is more complicated than that and touches on policies and attitudes that go back decades. Knowledge at Wharton spoke with Wharton professors Franklin Allen and Mauro Guillen about what is at stake and why this particular conflict is so difficult to resolve.

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After losing equity in their homes and stock portfolios Americans are now scrambling to make up lost savings by moving money into bonds and a host of other investments once considered either risky or unattractive. Although the dramatic shift in investment behavior is unlikely to have a long-term impact on the economy analysts warn that the new strategies could have a profound effect on individual investors themselves. Wharton faculty weigh in on the potential upsides and downsides that consumers face as they move into new investment categories.

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As the world haltingly recovers from the recession regulators are struggling to modify the financial system to prevent another crisis. The latest effort: stricter capital requirements to help prevent large banks from collapsing under the weight of unexpected losses. While the new proposals -- called Basel III -- are designed to reduce risk-taking by assuring that banks continue lending in a weak economy Wharton faculty and others are skeptical that the new proposals will accomplish this goal.

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A board’s primary fiduciary responsibility is to ensure that a CEO is generating profits for shareholders but Mark Hurd’s abrupt departure from the top job at Hewlett-Packard underscores how boards of directors do not judge a CEO’s performance on company prosperity alone. Rather boards use a broad set of intangible criteria -- ranging from how well leaders are able to earn employees’ trust to how well they deal with customers to how they conduct themselves off site -- as a way of evaluating success or failure. But these standards experts say can be extraordinarily difficult for boards to assess.

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The collapse in home prices during the past few years is a reminder of the horrors of deflation. Millions of homeowners owe lenders more than their homes are worth making it impossible to sell trade up downsize or move for a new job. What would happen if deflation were to spread across the entire economy driving down wages and the prices of all goods and services?

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