Please examine and read the last few posts, this is an interesting opportunity to put it all together so to speak at the end of the semester. An old fable tells the story of two animals, one who stores food for the winter and the other does not, are adults not still acting out this fatalistic play? Jack Nicholson famously declared You Can't Handle the Truth in a movie scene, as the article about Avoidance states, this has been a problem ever since accounting was invented. Consider
Nick Cage, in a never ending story of celebrities going through money, is needing to borrow money from Johnny Depp
A school district in SA just now declares a financial emergency
A museum is a bankrupt, just a few years after getting millions from the Ford Foundation, will anyone be held responsible?
The State of California, the City of San Francisco, are not balancing the books
Al of this speaks to the necessity of Sarbanes Oxley Sec 404, the importance of evaluating internal control. Budgets and variances matter, a lot!. External CPA firms are now required to report on how well internal controls are working. In advanced accounting we studied the Kaizen chart of continuous improvement, one can certainly construct a similar chart showing just how close monthly expenditures are to the adopted budget. If it is so simple, how do things get so out of whack, as in the above examples.
WE will be putting this all together in class this week. I make observations about the psychology of the popular culture and how it shapes what happens. In the above examples we have an example of denial or avoidance. Steve Kaplan made this observation last evening about investor psychology. His point, do not ignore the obvious. Or as a famous saying goes in investing circles, re arranging the deck chairs on the Titanic will not help, one must avoid the iceberg.
Understanding investors' psychology, and how that translates into the interrelationship between various asset classes, is enormously more important than recognizing true value. Of course many will disagree, and they will continue to be as puzzled during the next several major market swings as they were during the last several. If you want to know whether the weather will be hotter or colder a half year from now, then knowing the exact current levels of barometric pressures and frontal patterns will be of limited use. Knowing that it is January will be of far greater value.
More budget cuts as we go to Monday morning press time
City of Sam Antonio asks depts to cut back
Note the City is not too worried as they still have a general fund balance, well three years ago the NE ISD has one also, can they not see the writing on budget
County Deputies complain about cuts
THe last post is particularly interesting, I have noted that increasing anger and negative mood is typical of periods of economic stagnation, one can sense the frustration of the deputy just reading his e mail post….
Professor Elam 
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