Business Week reports that bad economic news drove down stock prices today.   Really?  Ok, Lehman may write off another $4 B, FNM and FRE are in trouble, but where is the new news in any of that, that news has been in the markets for months!  Last week the markets peaked over the S P 1300 level, was it good news that caused that move up?  Or is this just a roller coaster explanation for what happens day to day?  The truth is that stock prices peaked last year in October, they have been headed down ever since.  

I have held three symposiums for Community College Accounting Teachers here at the UNT Dallas Campus. This resulted in Wiley holding an education forum and the Executive Council of the Texas Management Accountants holding meetings.

Saturday August 9, 2008 Professor Barbara Scoefield, University of Dallas, and yours truly, Dennis Elam, delivered two hours each of Continuing Professional Education credit for the Exec Council.   Professor Scoefield discussed SFAS 157 regarding valuation.  The challenge for the immediate future is how to value intangible assets.  The FASB has proposed multiple avenues to reach this goal.  My presentation was closely related. Let Me Put It to You was an introduction to futures, derivatives, and options. This will e an integral part of the Intermediate II curriculum, students take note!  Photos are included on the albums at left, scroll down to Texas IMA. 

We very much enjoyed meeting more folks involved with the growing Certified Management Certification. We look forward to making more friends and meeting more of them in San Antonio. 

Theaters in Great Britain are becoming popcorn free zones.  Seems theater owners are tired of the mess but gee the markup on a 2.50 box of popcorn is ho say 2.35  I would guess.  My take is that someone needs to apply the southwest Airlines business model to theaters. Why on earth are tickets and popcorn about $8, and that is at the low priced matinee, resulting in 80% empty seats?  I would start lowering prices till I had the theater pretty well filled up. This is precisely how LUV vaulted over the other Texas Airline at the time, TTA Trans Texas Airways derisively known as Treetop Air for its use of turbo props.
it is ridiculous to have empty theaters for most shows and then try to make it up on the DVD sales, why not get the money up front and create more buzz for the film?  Interestingly films are still films in the theater but become digitized, which is what they were before they became films and then become digitized again for the public.  Anyway, this business model makes no sense to me, especially when the Chinese are pirating the DVDs and not paying any royalties. Get the money in the theater, you know, the way companies used to do it!

On July 2, 2008 GM Throws in the Towel, I wrote a post suggesting that GM would leave North America, it loses money here and makes money abroad.  Now Jerry Flint suggests that is actually happening.  Gee am I prescient or what about this stuff?  As Flint says, Buick is about done, as is Lincoln over at Ford.  I can imagine selling Chevrolet to someone and throwing in Pontiac and Caddy just as a bonus. But with Cerebus  bad luck with Chrysler, who would be interested in buying, perhaps the UAW?

Harold Maas does a goog job of summing up the weekly news.  You might bookmark his site.

He reports that Nissan will make smaller cars for Chrysler and Chrysler will make big pickups for Nissan. Well neither does the other well, and frankly this is not a departure from the Chrysler model, Chrysler has always depended on others to do small stuff, remember their alliance with Mitsubishi?  And if never works, if you can buy a Nissan who wants the carbon copy. Chrylser has always been a big mot0or body on frame company. They do that well,why not partner with say, Internati0nal Trucks thatused to sell their own Scout Brand?  At least thowroom would be full of truck buyers. 

Chrysler had the very successful Dodge Dart Plymouth Valiant Slant Six model back in the 1960s, and they they gave it up. Indeed it was a ConsumerReports Best Buy.  The Dodge Neon in the 1990s showed promise, they gave that up too. Failure to have a long term Deming TQM focus will eventually put Chrysler out of business. I guess eventually is about two years from now.

One of the never ending stories of business is how capital flows via the Invisible Hand to its highest and best use. The same thing is true for human capital. Forbes has its list of the Top Ten Dying Cities

I counted four in Ohio,no wonder it wil be a battle ground state in the election. The reason for the decline, taxes are too high, it is a union shop state, and it has a miserable weather climate.  One can see the same thing happeningin the world.  Eastern European countries have lowered tax rates and businesses are flocking there. Ireland has been hurt by the strong US Dollar but they too have had a  resurgence of business with lower tax rates. Will Ohio get the message?  I have mentioned in class that Alabama has attracted the new Hyundai Plant as well as the Airbus plant, wow, talk about a big victory. Alabama used to be the backwater of US Business, now companies are flocking there. Why, tax incentives, year round climate (no snow), and a better educated work force. Now why can't everyone figure this out?  Nest timne you hear a politician say what he or she wil do for Ohio, askyourself, why doesn't Ohio do waht Alabama and Texas do,things look pretty good here to me!

Here is a list of cities with teh most home equity.  Why have they been least affected by the  housing bust ?  The answer is a strong economy and lack of speculatoin on second homes. Nevada and California are suffering from the collapse of speculation on homes that  no one ever lived in, the strong cities reflect more of  a Warren Buffet I am here to stay mentality. And these cities are not of course in the list above.

Twilight is the series of smash hit novels from a 34 year old mother of three in Phoenix, AZ, hardly the Valhalla of vampires.  Yes you read that right, Twilight is a series of books aimed at teens about teenager Bella (not someone in Seventeen Magazine) who meets vampire Edward on the first day at her new high school. Sure sounds reasonable to me! Anyway, rather than recount all this  to you, please read the article at the hyper link. And you might want to surf

stepheniemeyer.com

twilightlexicon

twilightguy

twilighters.org

Elam observations

Here is a perfect example of socionomics, the study of how popular culture drives social trends, at work.
The magic of Harry Potter, which occurred during a move up in the stock market, is now followed by  stories with a much darker content, vampires versus magicians. The reason for this is that social mood is the opposite of what was happening during the Potter series when a roaring stock market was presided over by Mr. Happy Go Lucky Bill Clinton.  now the country is being pummeled by politicians telling us either that the country is in the worst shape since the Depression or, if that view is adopted we really will have the Great Depression again. Bank and brokerage melt downs, $4 gasoline, GM and Ford rumored to be bankrupts, global meltdown warming, take your pick!

In Education Class we have viewed movies including the Cannes short film winner this year and the 1940 His Girl Friday. My point was that schools and students are communicating using digital media to express their thoughts, and that is a trend schools should embrace rather than run away from.
Sure enough one student and then all of you commented that the school was spending a lot more time blocking internet content than promoting anything in particular. My comment, that won’t work. Sure enough read how fans, the author, and the boook publisher are using the net to spread teen fascination with the, er ah, couple.

And sure enough, this article details how fascination with Twilight is all over Facebook, MySpace Youtube, the net, etc, a teenage girl and a vampire, the Brady Bunch this ain’t.  The author even arranged a Twilight Prom to promote the third book, at Arizona State University no less, so much for where higher education is going….

But from a socionomic perspective there is no surprise here.  The mood has turned down as gasoline prices and unemployment numbers head up.  IN our EDAD class here on campus, grad students mention  that school officials would want to control the internet access to hopefully prevent pedophiles from learning more about their potential targets. And as long as we are legislating wishful thinking in that arena, no doubt other ‘adult’ sites for the kids are excluded.So what is included?   And so we have, come on in at Arizona State, the Vampire Prom.

Anne Rice began her run in 1976 with Interview With the Vampire.The timing was great as the DOW dithered and gasoline prices again were heading up. The Vampire Lestat however did not appear until 1985. By that time the gasoline crisis had calmed down, the DOW had bottomed and the bull market was underway. She did well with Tom Cruise no less starring in the movie, but her novels were fighting an upward stock market, and aimed at adults.More novels between 1976 and the bottom in 1981-82 would have found a more ready audience.  Meyer started in 2003, post 9/11, during a counter trend up move to the bull market. Graph the DOW in terms of the gold price and you will see the rally that wasn’t. Somehow it just does not feel the same. No kidding, now with the DOW headed down, with  each political party feasting on the gloom and doom warnings of their opposition, the stage is set for  a much more rapid acceptance of vampire tales. Indeed Meyer has wisely chosen to make hay while she can, the rapid downturn in expectations by the public drives the reality that perhaps there are occult figures in our midst, why else the sudden change in fortune for so many?

While one can dismiss this as harmless fun, this is a move from Harry Potter the Magician to a Vampire. Potter followed the classic Beowulf, Odyssey, Star Wars story of orphaned kid turned hero against evil forces, Valdemort in this case. But then Harry is quite at home in daylight, Vampires are only active at night, lurking in the darkness.   Indeed the very darkness that the Vampire requires speaks legions about the enthusiasm for shall we say, The Dark Side of the Force. 

I will be learning more about Edward and Bella, and Ms. Meyer who by the way graduated not from Berkley but Brigham Young, hey, I can’t make stuff like this up!

DLE

Sam Zell sold Equity Office Partners at just the right time for $39 B. Then he bought money losing Tribune newspapers. What was he thinking. Read the article. Lesson, do not stray from what you know how to do.
We often see this when Boards recruit medical doctors. Because the Doctor makes a mot of money removing gall bladders or such, it is assumed that makes he or she and expert on how to run say the Library Board. Nothing could be further from the truth. Doctors tend to be isolated and extremely well versed in one topic, like gall bladders.  Now Sam Zell is paying for such a mistake.  Knowing how to acquire and rent office space does not make you successful in an already money losing newspaper empire.

Maria Bartiromo is getting better and better at this interview thing.  But I am not sure Bil Ford is. In this
interview, he sounds a lot more like Al Gore.  Consider these gosh how did you get groomed to take over Ford answer!s

How did Ford lose $8.7 B in one quarter?
We had no idea where the tipping point would be (that people would finally react to high gas prices) and literally overnight people stopped buying trucks and SUVs.   Well duh Bill!

If in fact that is true, that Ford had no idea where the price of gasoline became an elastic consideration rather than an inelastic one, no wonder Ford is in trouble. Remember from economics that inelastic demand means the consumer is indifferent to price.  Elastic demand means that price increases result in fewer sales. Put another way, this is why Ruth Chris sells thousands of $100+ meal deals and McDonalds sells millions of $12 per couple meal deals.

One would think a company the size of Ford with one big gas guzzling product, the F 150, 250 pickups, would be conducting consumer surveys, reading independent predictions, following oil markets, etc all the time. And one would think, at least if I were in charge, those researchers would report to the Board and CEO, independent of the rest of the company so as not to be influenced by their thinking. But Bill says they were clueless when $3.50 gasoline hit.

My point here being, does your business or school conduct such research?  Public schools now face competition from private, charter, magnet, home schools, etc. Companies like Sylvan offer all sorts of advanced remedial training. Some big city school districts have already outsourced their operations to private companies. Hmm come to think of it, aren’t these the same governments that outsource prisons to private companies?  Well how much of a stretch is it to assume the same trend will not continue?  This is the reason to read publications like Fast Company.

Here is an out of the box thought. You are a government with a budget. You have all sorts of demands from parents, softball players, the elderly, and the Federal Government. In response other organizations like business have outsourced continual nagging problems even to other countries,you know like employment problems.  Routinely companies outsource local employment to Kelly Girls or Adeco. Now they have been outsourcing to India and China though I think that trend has peaked. Union demands pretty much drove this to happen. Okay, what is the powerful force in education, and the one that apparently is against change, see Washington DC, Detroit, etc. Teacher unions, that’s what. Contract to a private company and bingo, the union goes away.  Whether that appeals to you or not, trust me there is no union at the University of Phoenix. Think about it.

But I digress. Bill goes on to say he is a big environmentalist.  And says, quote, I knw this day would come. I ahve been an environmentalist my whole life. …I was viewed as a bit of a Bolshevik throughout my whole career.

What kind of kool aid is this guy drinking?  Can you imagine what kind of house he lives in, we are talking the Board Chair of Ford, a company  that bears his name. Private schools, private country clubs, owner of one of the ultra rare Ford GTs that he said wold be the symbol of Ford when he was CEO, that is the street going replica of the 427 ci Lemans winner-gee that hardly sounds like Kermit the Frog to me Bill!

Oh well read the interview and see just how defensive he gets, geez.

Brinker sold these two restaurants to Metromedia, good thing. These long term fixtures took Chapter 7 which means kaput. Bennigans as the article said was loaded with debt, no doubt used to purchase from the wiser Brinker who apparently saw this coming.  Leverage works both ways and high debt raises fixed costs as we learn in managerial accounting. High gas prices mean less travel, gasoline demand has fallen for the last 14 weeks. And so casual chains niched just above fast food like these are squeezed.  As one realtor observed to me years ago, folks with paid for property make money.