Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    Feb 17 Announcement

    Wed Feb 10 210

    Please see the announcement concerning Ash Wednesday Services at St. Joseph Church. This will be February 17 next Wednesday.

    As such we will plan to have classes on line that day. That might be a good time to try synchronous class participation!  I will be updating you in that regard between now and then. But given thelack ofparking, let's help out and meet on line that day, so no class here Feb 17, we will m eet on line however.

    Hello faculty,

    It has been brought to my attention that St. Joseph's Catholic church has Ash Wednesday activities all day on Wed Feb 17 (next week). Because of this, we will have very limited parking availabilty both during the day and evening. This is going to be an annual occurance so we can plan ahead for next year too!

     

    What this means is that we are asking you to consider alternative teaching/meeting options for your classes on that day. You can hold classes online or provide an assignment for students to complete during that time off campus. If it presents a huge problem for you to re-arrange your class schedule, please be advised that parking will be extremely tight and students may have difficulty finding space – especially during the mass times which essentially are scheduled for throughout the day/evening in 2-hour intervals. However, the decision is up to you. If it is necessary for you to meet with your class face-to-face, then that is ok; just be mindful of the parking situation.

     

    I apologize for the inconvenience. Please let me know if you must meet on campus that day. All faculty office hours for Wed Feb 17 may be suspended (just be sure your students are aware of it).

     

    Donna & Maria - please do not schedule any student advising appointments for that day.

     

     

    Tracy A. Hurley, Ph.D.
    Associate Professor of Management
    Division Head – Business, Arts & Sciences
    MBA Coordinator
    Texas A&M University-San Antonio
    1450 Gillette Blvd
    San Antonio, TX 78224
    210.932.6241 voice
    210.932.6246 fax
    tracy.hurley@tamuk.edu

  • Professor Elam

    China on Parade

    Wed Feb 10 2010

    I see that Michelle Obama has taken up childhood obesity as her signature cause. First Ladies usually have one which is  good thing. Lady Bird was known for beautification and Laura Bush for literacy for example. 

    Out of shape kids are nothing new. John Kennedy had an initiative on that back in the 1960s. A 50 mile march craze resulted in his brother Robert marching, yes, fifty miles. George Bush recruited Arnold S. to be his Obesity Czar. Now Michelle is on the same track. The answer is not so much the lack of exercise but an incredibly bad diet of sugary cokes, aspartame in diet drinks, cheesy pizzas and nachos, lots of white bread, french fries,  and salt salt salt. Suzanne Somers notes that a bag of flavored Doritos is 50% chemicals. Eliminate sodas, bread, chips, pizzas, cheesy treats of all kinds, substitute fresh fruit, water, and some calorie limited micro wave dinners (criticize that if you will but it works, ask Jenny Craig) which are available for about 2.50, half the price of a MCD happy meal, and bingo, the weight comes off. San Antonio by the way is America's most overweight city. 

    Picture 3 IN this regard this photo caught my eye today. Note the Chinese simply adopted the same female uniform across different services. The ladies in front l to r I assume are Navy White, Army Green, and Air Force Blue, at least they liked our colors…..hmm, no obesity problem here….. and hemlines  rather fashionably above the knee…knee high boots are back in fashion here now…..

  • Professor Elam

    SAFE

    Wed Feb 10 2010

    SAFE is not a reference to car recalls but an acronym for State Administration of Foreign Exchange, the oversight group for yes Communist China. Recall that no less than Jim Rogers pronounced the Communist Chinese as the world's best capitalists. SAFE oversees the $3 Trillion dollars of Chinese investments as well as their derivative and hedge practices. Now, you are a Chinese 'Communist' official, who would you hire to run such an operation. Hmm, how about the rock star from PIMCO, Pacific Investment Management, the Bill Gross Newport Beach opeartion, the world's biggest bond managers?  Yep that's exactly what they did. 

    Another article this morning suggests that the Chinese military wants China to sell some of its US dollar assets as punishment for our continuing to arm Taiwan. This is of course the problem with letting someone else become your creditor. At what point does the creditor call the tune?  This is surely an opening salvo in another front of Sino US relations, gee do you suppose this Administration is paying attention?

    Note this article authored by our newest link, Ambrose Evans Pritchard of the UK Telegraph.

    How does this relate to intermed accounting, glad you asked. The US continues to print money and borrow abroad. So far this has done little to nothing to improve our economy but it has recorded record deficits. Now the Chinese are attempting to put the brakes on what the US can do vis a vis refusing to hold our debt. They won't dump enough to depress the price of what they already hold but an interesting strategy, just to see if the US reacts. Remember in A = L  + OE, A can go down but L rarely does. 

  • Professor Elam

    Video Games Come to Dash Panels

    Wednesday Feb 10 2010

    It has been said that people can live thru all sorts of changes without ever realizing it. We are there, now. 

    Consider instrumentation, well okay you probably don't think a lot about instrumentation but you should. 

    Within my lifetime we have at one point, and a long point at that, known only analog, mechanical instruments. Think, Rolex or that fancy Breitling that John Travolta wears in the magazine ads. Those are mechanical watches complete with gear, springs, and all sort of pointers to indicate time in Travolta's case, goodness knows what. But it all goes back to technology that George Washington and Napoleon enjoyed. Well Rolex did make a splash so to speak by having someone swim the English channel in the 1920s to demonstrate its first waterproof watch. 

    All other instruments whether monitoring Casey Jones steam engine or the Titanic boiler worked the same way. There were some hydraulic instruments but that required routing a hollow tube filled with liquid from said measuring point to the gauge, a real problem if the tube broke. 

    Picture 2  The electronic sending unit and now the universal LCD display panel have changed all that. At left is the electronic display panel of a Nissan GT-R. It displays no less than six readings about the car, in analog fashion on a digital readout no less. The display is no longer limited to just a digital read out. Now the display mimics the much loved analog, pointer with display, read out of the last few centuries. And depending on where one puts a sensor, one can monitor just about anything, arcane stuff like transmission temperature for example. In fact I understand that Nissan contracted this task to a video game manufacturer. 

    Now fast forward to electronic tablets. See where I am going with this?  I can imagine all sorts of medical readouts like blood pressure, just put your finger in the socket ala the hospital these days, or multiple stock exchange readings or whatever. Information age, as Sarah Palin would say, you betcha!

  • Professor Elam

    Tuesday Feb 9 2010

    Steve Meyers of Global Perspectives has some thoughts on the market directions for this year. Students have been asking how the Greek debt crisis affects markets. Steve explains that believing the European countries will 'bail out' Greece ignores the basic problem, too much debt. 

    Here is the problem, explained in accounting terms. We know the basic equation to be

    Assets = Liabilities + Equity or A = L + OE

    Remember that a balance sheet is a snapshot in time. Time my friends changes just as soon as the snapshot is taken. In intermediate accounting II we study the right hand side of that equation. The L part does not change, once a person country company takes on debt, the debt is  owed. The A side however is subject to change. Let's consider oh say, the state of Nevada. Nevada depends on tourists coming to town to gamble and spend money. Nevada has bet big time that this will happen, forever. Its A side is a bunch of casinos, would be condo developments and roulette wheels and blackjack tables. The L is the debt against it and OE is what is left over. 

    The downturn means that tourists have stopped coming and spending. Condos sit empty, Dubai missed their payment on City Centre. Whoops, so the value of A has gone down. But the value of L, the debt, remains. And so the only thing left to vary is OE, equity plummets. This is why Nevada can lay off all its state employees and still be underwater on its budget, a staggering statistic. This scenario is being repeated in countries that promise never ending welfare, companies and cities that promise defined benefit plans, none of those promises can be kept in an economy in decline, the revenue of property tax, income tax, and just plain income is not there. But the debt is…As a  student observed in class last night, this bail out game has to end somewhere, EU bails Greece, then Britain is in trouble, who bails Britain, CA AZ NV NY in trouble, the US bails them, but wait, who will bail out the US?  This is why fiat currency the world over is now in question. Countries will debase or devalue their currency to make it easier to re pay the debt. And so commodity values, oil, copper, gold silver rise as real stores of value, politicians cannot manufacture oil gold silver. 

  • Professor Elam

    New Links

    Tuesday Feb 9 2010

    I have added some links to make it easier to expand your world view. 

    The accounting links are to blogs by other accounting professors and writers. These tend to focus more on accounting issues such as the activities of the SEC and the PCAOB. 

    The View from Abroad consists of various English newspaper sites from around the world. It helps to read different perspectives to have a world view.  I considered adding China Daily but frankly it looked more like People Magazine than something independently written in Beijing. When I saw a newly released 1961 photo of Marilyn Monroe in the China Daily courtesy of Reuters, well, not what we are seeking here.  We will change these from time to time there are so many webs with different viewpoints now. 

    The economic blogs are particularly well done and contain lots of specific financial news you will not read in the papers. 

    Let me know what you think about the selections, we are open to new ideas. 

    As always my posts will be about the effect that accounting and financial events have on our lives and society. As Oliver Stone says, Money Never Sleeps. 

    For example, here is an article from the Japan Times about Japan bashing via Toyota, a different point of view than one gets in say the Detroit, Michigan newspaper. Come to think of it that would be a good example, here is the same subject but with the Detroit point of view. There is of course nothing here about how the US Govt nationalized GM and is no doubt subject to UAW influence to move Americans away from Japanese autos to those made in economically shrinking Detroit.

  • Professor Elam

    Over Your Euro Debt Limit, Just Call Goldman

    Tuesday Feb 9 2010

    It seems the number crunchers at Brussels, the EU center, cannot get their arms around what Greece really owes. Yep when in trouble call the Go To For Creative Financing Guys, Goldman. Goldman configured an exotic derivative currency swap allowing Greece to move some of its debt maturities to the future. In the future means not on our books today when the debt cannot exceed sixty percent of the GDP rule is applied.

    Picture 1  Gee does this sound a bit like Enron?  Hmm, Goldman stock as we noted recently is down $40 from its recent highs. We will distribute our Must Read Handouts to classes this Wednesday. Plan on snuggling up with them over the weekend, this stuff reads like a fiction thriller.  It must be tough to write the screenplay for Money Never Sleeps when Goldman is playing it out for real every day.  

  • Professor Elam

    Lines in the Sand, Part II

    Monday Feb 8 2010

    We made the point yesterday that eventually leaders get themselves into trouble by failing to emulate William B Travis right here in San Antonio. Travis is said to have drawn a Line in the Sand with his sword. Those staying or leaving had to get on one side of the line or the other. Say what you will, it is an effective metaphor. 

    How bad are things getting?  It seems that Nevada could lay off every single state employee, and the budget would still be in the red!  So expect draconian measures to come in that state first. 

    It was only  a few years back that California gave then Governor Gray Davis the boot, recalled him, voted him out, Davis was stunned, claiming that he should be retained given his 'experience' a unique platform in deed. Arnold Schwarzenegger ran and was elected among considerable expectations. Here was a self made immigrant from Austria, wealthy from his movies, married to a Kennedy (Maria Shriver), who promised to be the Governator.  There was even talk that this would cause a few reporters to show up in Sacramento. 

    At that point there was even disappointment that Arnold could not run for President as a foreign born citizen. 

    Gee what a difference a few years make!  Now California is among the top ten worst debt bets in the world. There are daily television shows about its plight. Its debt is barely above junk rating. My point is this. Arnold got to Sacramento and tried change, like re districting. It did not work and he was opposed every step of the way. Well, it would have been better to just say no, refuse to sign the budget busting spending bills, and perhaps lose to a bigger spender, just to be able to say, well I told you so. As it is, what does this former well regarded movie star have to show for his foray into politics?  A mess, that's what. A formerly principled person brought down but the usual inside the beltway tax and spend thinking. Considering Arnold hardly needs the job, well, what was he thinking?

    Travis died for his beliefs. George Washington served without pay during the Revolutionary War and returned his commission at the War's End. Harry Truman returned to Missouri with no more money than he had when he went into the White House. Sam Rayburn, Speaker of the House, paid his own way to Panama on a fact finding trip while in office. Lines in the Sand……An ethical person knows how to act and does not do so based on the circumstances. 

  • Professor Elam

    Super Bowl Mood

    Monday Feb 8 2010

    Speaking of mood, what did the Super Bowl commercials tell us about the public mood?  These commercials are expensive, and usually represent the very best that ad agencies can create. Indeed entire campaigns have started right here like the original Apple Mac campaign. But, frankly I found most of them to be rather hollow, not much there. To me this speaks to the overall downturn in social mood.

    One Doritos commercial did speak to the mood and prevailing culture. A man arrives at a house for a date. A small boy is eating Doritos and the man grabs a chip. Mom is readying herself in the other room. The boy replies

    keep your hands off my Mama, and my Doritos

    Such is the state of marriage, divorce, and dating in America today.

    My point is that such a commercial would never have happened in the 1960s, this is about as far from the Brady Bunch and Partridge Family as one can get. The fact that a major company would think all this is humorous is in itself a significant on where we are now. 

    There were numerous commericials for upcoming movies. Did you notice that most are of the horror genre, the Wolfman being the lead example. Commercials on the Super Bowl are tested exhaustively to reflect the public mood, and that mood is dark.This is reflective of the bearish financial markets, and just think, we are at the top of a recovering wave. Prepare yourself for what mood will be like at the bottom of the next wave. In other words, if this is the mood at Dow 10,000, what will it be at Dow 6,666 again?

  • Professor Elam

    Anger in the Air

    Monday Feb 8 2010

    From the latest on Socionomics at the EWT website. Students have expressed puzzlement at my comment that he public is angry and social mood is negative. Here are some observations about what is going on.

    Increasingly negative social mood is overtaking politics — and the U.S. stock market.
     
    A recent CBS News poll put President
    Obama's job approval rating at a new low of 46 percent. This is not
    surprising from a Socionomics point of view:
     
    "Correlation with the stock
    market, consumer confidence, economic performance and other measures
    suggests that social mood is by far the main determinant of
    presidential popularity… There are two reasons for this fact. First,
    his actions, despite their endless analysis in the press, do little to
    affect his popularity. Second, his popularity is dependent upon a
    social mood and economy over which he can exercise no countertrend
    influence."
    from The Wave Principle of Human Social Behavior
     
    "Anger in the Air" was the
    sub-headline on television, when the January 19th election results
    announced Republican Scott Brown the winner. The meaning was clear:
    Anger among Massachusetts voters in the U.S. Senate special election
    led to what would have normally been unpredictable: A Republican beat a
    Democrat in what is arguably the bluest of blue states. Not since 1972
    had a Republican had been elected to the U.S. Senate from the Bay State.
     
    "What a turn of events." That's what Diane Sawyer said during the January 22 broadcast of World News Tonight after a report on Ben Bernanke going from Time
    magazine's Person of the Year to the possibility that he might not be
    re-appointed. Even some Democratic Senators voiced disfavor of the Fed
    Chairman. He was ultimately re-appointed, as the January Elliott Wave Financial Forecast predicted:
     
    "Social mood is still too
    elevated to deny Bernanke reappointment as head of the Fed in upcoming
    congressional confirmation hearings. But rising political tension
    confirms that his next term will be far more stressful than his first    ."
     
    Just one day before that broadcast,
    President Obama announced the "Volcker Rule," which proposes to
    restrict speculative investments made by banks. Former Federal Reserve
    Chairman Paul Volcker stood towering next to the President during the
    announcement. The diminutive figure of Treasury Secretary Geithner
    stood several feet away from the President. The setting suggested Obama
    was leaning more heavily on Volcker's advice than that of his Treasury
    Secretary. Following the announcement of the Volcker Rule, media
    discussions revolved around whether Geithner would last much longer. On
    January 27, Geithner appeared before the House Oversight Committee
    concerning another AIG bailout controversy. One member even asked
    Geithner whether he should step down as Treasury Secretary. Like
    Bernanke, Geithner is also sailing through the choppy waters of an
    increasingly negative social mood. Only time will tell if he's able to
    keep his boat from capsizing as waters become more agitated.
     
    On January 27, President Obama's
    lengthy State of the Union address included a direct rebuke of a recent
    Supreme Court decision (allowing direct corporate contributions to
    political campaigns). The cameras saw Justice Alito shaking his head
    and apparently saying, "definitely not true." Supreme Court Justices
    are rarely spoken to directly in a State of the Union speech, never
    mind openly criticized. Chalk it up to Washington's growing political
    resentments.
     
    The political strife mirrors recent
    stock market action, which saw its worst three day decline (January
    20-22) in months, breaking the uptrend line from the March 2009 low.
    The NASDAQ lost 5.4% in January; the Dow Industrials fell from 10,729
    on January 19 to 10,067 on January 29. It was the worst month for the
    blue chips since February 2009.
     
    The Wave Principle suggests the
    downward trend in social mood has further to travel. Our
    researchindicates that what's ahead may be worse than a severe bear market.