Professor Elam

Accounting & Investing Info for San Antonio A & M

recent posts

about

  • Professor Elam

    Where is the Credibility, Critical thinking

    I was just listening to two 'experts' on the economy, one head of Moody's economy.com and the other the CEO of Google.  The economist said the govt needs to spend more money and then  went on to say the the govt in its wisdom was going to decide which banks are worth saving and which are not, gee weren't these the same guys running Fannie Mae and Freddie Mac, what would they know about running a bank?

    As if that was not enough, the economist went on to say that he oculd not have imagined the ecomomy like this even 12 months ago, but gee he was just listing all the cures, gosh that was fast from I cannot imagine to I know just what to do in nano seconds. 

    The Google CEO seemed to think the govt needed to spend lots of money this from a business with no debt, I don' think this guy has both feet on the ground, why not advocate the govt go the same way as Google,
    like how does lots of debt to third parties help, why not just increase take home pay with less tax witholding

    Oh well, analyze what theses folks are saying and compare it to reality, critical thinking

  • Professor Elam

    Market Square Sale Plan is DOA

    Last year the City of San Antonio lost $227,000 operating Market Square.

    Now plans to sell it are out. The article reports the City of SA has a $2.3 Billion budget, it does not say what the  potential deficit might be.  

    My sense is that the recession is now upon San Antonio. Officials have thus far maintained that San Antonio is doing much better than other parts of the country, I agree. But events such as this suggest that slowdown has arrived in SA. The large number of Federal employees and diversified economy will undoubtedly make the R easier here than in say Michigan!  We will continue to track developments for you.

    This is the problem with so many govt ideas. Without stockholders there is no one minding the store or demanding a return on equity

    Alamodome
    Sea World Fiesta Texas, good ideas but probably not living up to the promise
    Downtown subsidized convention complex – the folks at TSCPA tell me San Antonio is too expensive to have conventions here!
    Market Square
    Hemisphere – restaurant on needle closed for a year, wrong occupant

    On the other hand the spurs at the ATT center work pretty well and as far as I know neither of those is subsidized….

  • Professor Elam

    Supply and Demand

    Check out Calvin and Hobbes on supply and demand, 

    sound familiar?

  • Professor Elam

    Congress Embraces the Enron Approach

    It just occurred to me that the Stimulus Plan i nothing more than an Enron SPE. 

    Some of you are reading about Enron. Enron created Special Purpose Entities. Enron moved the liabilities it created off the Enron balance sheet to the SPE balance sheets.  So Enron never owned up to their real liability. Then Enron recognized all the revenue for years and years ahead using questionable mark to market accounting. 

    Congress is borrowing over a trillion dollars for various stimulus plans. This money must be borrowed via Treasury notes and bonds.  This money is coming from overseas making the US even more of a net debtor. 
    There is, handily, no US balance sheet, at least one that is published. So there is no explicit debt covenant, a line in the sand, a current ratio, a debt equity ratio, whatever beyond which it cannot go. Rather there will finally be explicit nyets. 

    What if the oil exporters start demanding gold for oil?
    What if the Chinese want stated purchases of their exports in exchange for buying more US bonds?  Whether the Chinese demand this or not, it will eventually have to happen, our Chinese imports fund their purchase of our bonds. Now that our consumption has decreased, the game of musical chairs is coming to an end. Eventually if not already, the Chinese will have fewer of our import dollars to fund anything. 

  • Professor Elam

    High Noon in Detroit

    The UAW walked out  

    on talks with GM about reducing future health care liability.  We will take a look at pension obligations this semester in Intermed II. The problem is that GM has more future liability for funding health care costs than it can afford. Please read this article as it focuses on future liabilities. 

    Apparently the union thinks that the government will  loan GM the money to do this. It all comes to a head  Tuesday as GM has to show a  viability plan to keep its loans and get more money. Now that I think about it, the government will have to loan GM more money because GM does not have it at present. The alternative is a very very real bankruptcy for GM. In the midst of this recession getting worse every day that would not be pleasant to contemplate. It is hard to imagine what would happen to the tens of thousands employed in the dealerships. Speculation is that if GM took a bankruptcy

    most folks would be reluctant to buy a car from GM
    all financing would cease, all suppliers would demand cash, suppliers probably would then be on the ropes in a domino falling horror story; since GM could not pay them the suppliers might well be bankrupt making it impossible for Toyota and other auto makers to get their parts
    the value of all existing inventory at GM dealers would immediately be worth less money, someone has that inventory floor planed or financed, this would make the debt crisis immediately worse
    Oh and, in a bankruptcy the attorneys would get all the money……

    So in the face of nationwide job losses, will the Democrats come to the rescue of the UAW which frankly is acting rather badly in the face of imminent disaster.  As thousands of folks are being laid off in other industries.  GM pays its workers more than the southern non union shop auto companies, this is expecting a lot. True the UAW has contributed probably hundreds of millions to Democrat campaigns, I wonder if they wish they had simply kept that money now, gee they could start funding their own plan. 

    I have mentioned in class that we are peering into the abyss of a stock market meltdown, we are a scant 300 points on the Dow or about 70 S & P  points from taking out the fall lows. If those lows are broken, well, expect a big drop. Markets hate uncertainty, a GM bankruptcy with the domino effect of default on over $40 B in paper as well as the resulting debt on dealerships, well, the administration will face that first test Joe Biden was talking about.  Barney Frank has said such talk of bankruptcy is just union busting. The stock market is closed Monday and will open Tuesday the same day the plan has to be presented. Frankly this sort of brinksmanship theater should not be happening. 

    Congress as I mentioned in a previous post is spending $787 B on all sorts of pet projects, the money to keep GM going is paltry compared to that. Someone is not paying attention here, this problem should have been addressed in the bill the President will sign Monday. 

  • Professor Elam

    Do The Math

    I first noticed this stopping at HEB delis. Ask the clerk for 12 ounces of whatever, and you have one stumped person. The responses are always interesting. Some wonder pensively what that might mean, waiting for me to tell them. One lady almost angrily declared that was not possible with the scale, after all it was delineated in pounds, not ounces. Tonight a high school or college age young lady asked me how much 12 ounces was…let's see 12/16 would be three quarters of a pound. This simply means that the person behind the register, at a spot where fractions literally count, has no idea what they are doing. 

    Simply put, they never learned fractions. Apparently the store never realizes what is going on.  Just a few days ago, the supervisor at a Bill Miller called me back over after I paid. He politely informed me that 12 ounces was not the $7.75 I had been charged, it was only $1.23!  As I said no he reassured me 12 ounces was  a very small portion, even shaping his hands to the size he imagined. Folks I cannot make stuff like this up.  I convinced him the charge was right but I wonder, how many undercharges could there have been in just one shift, the customer is likely to be just as ignorant as the clerk, even if  honest, eh?

    I understand that the top 15% of college students in China or India total  more than our entire college population, Gee I wonder which will come out on top??????

  • Professor Elam

    How Much is $787 B? Do you feel stimulated?

    Glad you asked. Current estimates are that there are 304 million people in the US. This counts babies, prisoners, dogs and cats listed with SS numbers as dependents on tax returns, you name it. 

    Okay I actually own a calculator that will take this many digits, no having to move the decimal over and the answer is 

    787,000,000,000 divided by 304,000,000 is 

    $2,588 for every man woman and child in the USA. 

    Why not just send us all a check?

  • Professor Elam

    24 Poses Ethical Dilemmas

    I mentioned the ethical dilemma posed in the television show 24 in Ethics class this past week. 

    to view episode 8. 

    Background is simple. The bad guys are trying to take over a ficitonal African country named Sengala. 
    They have kidnapped the female President's husband. The new female President has forces posed to invade Senegal foiling the plans of the rebels who want to take over the country. So the bad guys (sorry I could not find the character name of the bad guy on the site for some reason) threaten to send her husband to the White House one body part at a time if she does not step down the US forces. There will be a blood bath in Sengala if the rebels take over, the prequel emphasized that the rebels are using child soldiers as we saw in Blood Diamond reviewed by several of you in class. 

    Jack Bauer, the ever ready can do anti terrorist agent, wants to dispatch female FBI agent Renee Walker to the home of the one person who may know where the husband (referred to as the first gentleman in the show) is being held. Jack's  idea is to threaten the life of the wife and child of the potential informer forcing him to save their lives by talking. Jack and Renee have 45 minutes or the husband gets it.  Larry Moss FBI agent says wait we can't do that, that is not ethical.

    What would you do?

    Picture 4

  • Professor Elam

    UT Football #2 in Revenue

    No doubt about it, UT football is big business. 

    This report from Forbes shows just how big it is. One of the students reminded me that UTSA is trying to get in the football business, I find that interesting as I thought UT Austin would oppose that idea.  I suspect however that UTSA will find that like SWT aka Texas State middling around in Div 2 or 1AA is more a drain on resources than a revenue stream. 

    One of the tv stations in Austin did a special on how UT prepares for a football game, not the team mind you but for example. A siren or horn is sounded on when tail gaters can officially enter the designated area on Friday night for the next day game, yep they camp out all night.  Administrators at other schools dream of such revenue streams. But as Texas State and even Univ North Texas found, gold is hard to prospect. 

  • Professor Elam

    A Show for the Rest of Us

    Numbers  

    actually has a mathematician help solve mysteries on CBS Friday Nights at 9PM.

    Judd Hirsch has a history of joining  interesting movies and television shows, this is no exception. A math whiz helps solve mysteries, tonite he is figuring jury probabilities. Far better than the average network fare, consider this one!
    Picture 2