Accounting & Investing Info for San Antonio A & M
Monday Sept 5, 2011
I have mentioned in class the importance of obtaining a certification in you field. For an up close and personal view of the real jobs picture in America, click on this Business Insider article.
I thought the graphs comparing this with past recessions were interesting. No net job s have been created since 2000, lots of folks cannot afford to retire, and more people are coming into the 'work force' all the time. So, no wonder unemployment is up.
Saturday Sept 3, 2011
Bond holders agree to a four month extension on the $538,000 payment due this past Thursday.
So class, why did the bond holders agree to do this? Because if they foreclose at this point they still won't get paid and it is clear the present operating business plan does not work. The horse race track simply does not make money.
Now the strategy is to convince some Las Vegas casino operators (who are not in the best shape themselves) to buy into the track. This would give the track some funds while they attempt to persuade state legislators to allow slot machine and or table stakes gambling. The latter seems a very long shot to me.
As I said in class, this is the same predicament that the Atlantis Resorts in the Bahamas and Dubai are experiencing. Cash flow will not support operations much less cover debt service. An entirely new plan needs to be adopted. But frankly, I don't see much light at the end of this tunnel.
These two examples demonstrate my point that the economy will re visit the March 2009 lows in the stock market because both business and governments are overloaded with debt.
The New Civil War
The very phrase ‘American Civil War’ conjures up all sorts of images. One recalls a dashing Clark Gable courting a standoffish Vivian Leigh in Gone With the Wind. Or perhaps one remembers Clint Eastwood playing the hard bitten loner searching for gold in The Good, Bad, and Ugly. Still one thing is for sure, the New Civil War, with the same geographic outlines as 1861-65 rages on. Let’s take a look.
Charles Mason and Jeremiah Dixon surveyed the southern border of Pennsylvania between 1763 and 1767. That became the demarcation line for the later Missouri compromises on slavery and then the line of secession for the Southern States during the Civil War. So, envision the Blue Union North and the Red (gray?) Southern States. Now let’s fast forward.
The Taft Hartley Act of 1947 allowed states to pass Right to Work Laws. Such legislation prohibits compulsory union membership (the closed shop) as a condition of employment. These states are known as Open Shop states. All the Southern States have passed such laws. The Northern States however remain Union Shop states where compulsory union membership is the law.
The ultimate end of this dichotomy, a unionized north and open shop south, can be seen in the auto industry. Unable to fund promised future benefits, GM and Chrysler collapsed and were rescued by the pro-union Administration. Virtually all new automobile plants built by foreign manufacturers are located in right to work states.
The Open Shop southern and western states tend to vote red for Republican. The Closed Shop Northern States tend to vote blue or Democrat. Now, pull it all together, the three maps of the Civil War, the Right to Work States, and the Red Blue voting states, are all the same map.
Amid the Continuing Economic Disaster dating from 2000, there is one growth industry, natural gas. As modern day Political Don Quixotes (like the President) literally tilt at windmills and solar power, shale gas has been discovered in abundance, both in the South and, increasingly, uh oh, in the North. The Hills of North Dakota are alive with Now Hiring Signs, ditto the Rust Belts of Pennsylvania and West Virginia. One might think a beleaguered Administration, desperate for job creation, would embrace perhaps the only industry in expansion mode. One would be dead wrong.
War has been declared on the oil and gas industry. Drilling permits were shut off in the Gulf of Mexico. Drilling in ANWAR remains forbidden. Hearings on the alleged terrible practice of hydraulic fracturing begin on Capitol Hill. The EPA proposes regulations which will shutter perhaps 8% of the entire national power grid, at a time when American struggle to pay monthly bills. This is all done in the name of ‘green energy’; but where is the Green Energy employment dividend?
This month alone three companies in the richly subsidized solar power business have declared bankruptcy. Now, as always, alternative energy is not competitive with carbon fuels even with helicopter showering of subsidies.
We’re not as far removed from the original Civil War as you might think. My grandparents actually knew kinfolk that fought in the War Between the States, yes really. If one was born between 1883 and 1895 as my grandparents were, those stories of the Blue and the Gray were still vivid around the fireplace.
People of all ethnicities are voting with their feet, leaving New York and IL for the job rich Southern States. It is looking more like a Southern Governor (Perry) has a shot at taking on the Bluest of Northern Senators now elected President. He is out to re-make America, and making good on his promise. Will Northern states desperate for jobs and income stay in the Union fold?
I suspect another Battle of Gettysburg awaits in the form of the National Election of 2012. The national election is won on a State by State basis, remember the map? We have the resources to be energy independent via our own oil, shale gas, and nuclear power. Will American embrace its own resources, or continue to tilt at windmills and solar cells?
Thursday Sept 1, 2011
The third solar energy company in a month has now declared bankruptcy.
I understand that it also takes a great deal of energy to actually manufacture a solar cell, so much that over the life of the cell the net gain in energy saved is questionable.
My opinion has always been that solar would best be used as a boost to water heaters. A line could be run from an existing water heater to a radiator on the roof. Given the temperatures we have had this summer, 100+, I suspect a black radiator could easily maintain a temperature of 110 for the water.
Constructing homes with porches and awnings so that no window received direct sunlight would also save energy in cooling the home. This was standard procedure in homes in the 1890s.
Here is an example of what I am describing. Both the first and second floors are ringed with porches all around the building. The result is that direct sunlight does not hit the windows. And you can sit outside in the shade. Note the French had this figured out in 1700 but now we have abandoned this great idea.
Wed August 31, 2011
The fictional story of Atlantis dates to Plato and then to a fictional re creation in 189.
In an earlier post I had mentioned the ill fated Retama Race Track here in San Antonio. I has a $500 K debt payment due tomorrow, and well, it does not have the money.
Now, ramp that idea up a few notches. You know those endless weekend cable tv ads inviting us to the Bahama Atlantis, well turns out there is on in Dubai as well, see photo at left, yep that's the famous Palm Island.
Now owners of Atlantis are juggling debt balls in the air trying to keep the 62% occupied resort going. I have noted this is a world wide phenomenon. In cash strapped Vegas, the MGM Mirage is doubling down in its bets for MGM China in Macau.
The world is awash in debt which makes the accounting equation A = L + OE out of balance.
Al debts must be paid either through bankruptcy or with real money. Substituting debt for more debt is only delaying the inevitable. That is why Japan is in its third 'lost decade.'
Tuesday August 30, 2011
This week, well okay most weeks, I will be mentioning the importance of obtaining certifications in your field. This sets you apart from those that do not have them. Case in point, just today page C12 of the Wall Street Journal WSJ, the Certified Financial Analyst designation.
Do not confuse this with the CFP Certified Financial Planner designation. The CFP was created after the attempt to burnish the image of life insurance salesmen with the Certified Life Underwriter pretty much failed. A CFP is a salesman. The ad on page C 12 pretty much promotes the selling but the CFA designation carries considerably more weight than CFP ever will. CFA would be good for banking and investments.
Have you checked out the list of certifications on the left sidebar?
Monday Aug 29, 2011
Take a look at
That's the Tata Motors site. We discussed ways to evaluate a company in the Monday classes, I have several links on the blog about this. Is TTM a buy?
Who is TTM
What do they ?
What is their strategy, where are their markets, do they have a track record of success?
What internet sites would you use to decide if this is a good idea?
Did you check this out on finance.yahoo.com or marketwatch or reuters
Are you ready to stand up and present to the class?
Did you read the entire last year of the http://www.themarketperspective.com
well I wrote it don't tell me you don't have time to read it!!!!
Okay sound off!
Gee this is the first week of class, Welcome to A & M….
Monday August 29, 2011
Note this is a repeat of a post from a year ago, just as relevant now.
One might wonder just how so many people can look at, the oil spill in the Gulf, unemployment in Michigan, health care, etc, and reach such different conclusions. The answer is in this hundreds year old fable of the six blind men and the elephant. Notably it appears in multiple religions and languages.
now, couple this point of view story with Dale Carnegie's observation that every person thinks he or she is the very center of the universe. Indeed, for thousands of years everyone assumed the sun revolved around the earth. Even when it was proved otherwise, the Catholic Church waited about four centuries to admit Copernicus was right. So, don't expect those that are convinced of their views that they should change them, even within your lifetime!
Behold the Elephant
It was six men of Hindustan
To learning much inclined,
Who went to see the Elephant (Though all of them were blind),
That each by observation
Might satisfy his mind.
John Godfrey Saxe, 1816-1887
We re in a period of prolonged economic stagnation. This is the inevitable result of the 1982-2000 period of boom. This bear market will root out failed strategies and require new perspective if one is to survive it intact. Another feature of such a period is the idea of exclusion. Other ideas and indeed peoples will be excluded rather than included. Already there are calls to nationalize British Petroleum (a third world idea of expropriating assets of foreign company) and Israel is under fire even more than usual. To appreciate and endure what is happening, we return to the parable of the six blind men of India who attempt to describe an elephant.
Saxe’s poem quoted above is the most famous Western version but there are Jain, Hindu, Buddhist and Muslim versions as well. Here is the Jain (an Indian religion of the ninth century) version.
The blind man who feels a leg says the elephant is like a pillar; the one who feels the tail says the elephant is like a rope; the one who feels the trunk says the elephant is like a tree branch; the one who feels the ear says the elephant is like a hand fan; the one who feels the belly says the elephant is like a wall; and the one who feels the tusk says the elephant is like a solid pipe.
The point of the story of course is that everyone has a totally different perspective of the same facts. Working in groups of faculty, administration, and students has brought this home to me the last few years. Indeed, there are many elephants on the same campus.
Now, to complete one’s understanding of what is happening, appreciate that the power of Point of View prevents each blind person (or the one sitting next to you in a meeting) from seeing the perspective of anyone else in the group. Dale Carnegie put his finger on this one, each person believes that he or she is the center of their own universe. And so each argues that the ‘elephant’ is a tusk or a pillar but certainly not a rope.
This difficulty takes many forms. Peace in the Middle East to Syria means an absence of Israel. A ‘clean environment’ may mean some fantasy escape from the necessity of carbon based fuels. Access to health care may actually mean considerable re distribution of wealth. Just his week Oliver Stone was extolling the virtue of Hugo Chavez to Larry King; a Congressman expressed amazement at this view.
The ultimate negative social disagreement is war. With the Dow at 10,000, North Korea has already sunk a South Korean vessel resulting in loss of life. Israel may well attack Iran. If my assumptions come true, that the Dow will revisit its March 2009 lows in the next two years, expect that opinions and actions will harden that much further.
Saxe sums all this up as follows, and remember this observation has floated around for hundreds of years, nothing is going to change human nature.
Moral:
So oft in theologic wars,
The disputants, I ween,
Rail on in utter ignorance
Of what each other mean,
And prate about an Elephant
Not one of them has seen!
Monday Aug 29, 2011
I'm not a football fan but the re alignment of UT Austin and A & M has caught my attention. A & M is looking to move to a more 'prestigious conference. In the South East Conference it will play Ole Miss and Alabama, both classic football powerhouses.
This article notes the differences in quality of opponents. And the writer points out that UT really has no interest in a competitive conference. Far better to play Baylor or OK State with fewer resources.
And so perhaps the so called Big 12 conference will dissolve and like Notre Dame, UT would go independent.
In that case we might FINALLY see what schools like Tx State and University of Houston have always dreamed. Imagine a real Texas Conference that looked like this.
TCU
SMU
Baylor
Texas Tech
Tx State
UTSA
Univ North Texas
Univ Houston
Rice ?
and then perhaps a wild card Rocky Balboa choice like West Texas State in Canyon, or Kingsville which has done very well the last few years
These schools are in large enough towns to be able to generate enough attendance to earn Division I status.
Sunday Afternoon 2:16 PM CST
All classes are reporting the inability to log in to the textbook sites. We will work thru this over the next week.
In the meantime, read the RL assignment and post your essay on Self Reliance.
ACCT 3310 and 3312 the pastina assignment is under course content, so you can work on it.
ACCT 3310 Read Chapter 1 in Warren.
That's plenty for this weekend.
Professor Elam 