Gerge Will weighs in on the need for stimulus.   Is there really a recession?  Yes there are predictions but will we have created a problem and solution before it happens?  As George observes, Congress loves a crisis because it gives them an excuse to ‘solve’ a problem.

Meanwhile Rahm Emanuel favor yet another New Deal.  He concludes that it is ‘time for the Federal Government to Act.’  Sorry I can’t resist a reaction to that one. When did the Federal Government last act in a constructive manner? Katrina, Swine Flu, the metric system,  the computer based 2000 tme clock fiasco, linking flight schools students that want to fly but not land,  Just wondering….for example, he advocates yet another plan a Universal Saving Account. Why not give  exapnd IRAs?  Why not start weaning someone off Social Security by letting them keep their SS contributions in their IRA? 

At any rate there are two differing views of where we and what needs or does not need to be done. There are oodles of other opinions and surveys galore.I look forward to your essays on regulation and stimulation.

About one year ago on February 2, 2007 we noted the beginning of Chuck Norris World Combat League.   We were startled at the mix of reverence for the non violence of Dr. King coupled with the kick off ( no pun intended) of perhaps the most violent sport yet. We suspected that this turn to the dark side of human interaction would bode poorly for the markets in the near future.

Well fast forward to today.  The DOW has fallen over 10%, the Recession Word is on everyone’s lips and the pols are trying to outdo one another in giving us some of our own money back, to spend of course. But I digress.  John McCain no less has described such ‘all out fighting as human cockfighting.’  That is a good quote coming in the middle of the presidential campaign.  About  a year ago, Fast Company magazine ran an article decribing how fringe events,like tatoos, can become mainstream.  Now we have one Eugene Robinson an admitted fightaholic with his book entitled what else Fight.  But this is not Marquis de Queensbury rule book.  Rather it covers everygthing from surviving a brawl in a 5 x 7 prison cell to  kenpo karate and mixed martial arts (formerly known as no holds barred in cowboy movies).   Indeed Eugene was autographing his book at a store right here in Dallas Texas this past weekend. The Dallas Morning News reviewer states it well, ‘let’s hope for the sake of civilization that it (unlimited combat) stays a subculture.’ Sorry a bit late for that…..

The book appears as videos of teens fighting , including females, are now appearing on You Tube. Talk show psychologists are exploring what it means. Well we need look no further than the markets, that ever ready Dr. Phil of popular culture, to know exactly what it means. And the market is DOWN. Human nature is turning to the dark side of the force from fighting videos to book signings.

Topping it all off in a further ironic twist, Chuck Norris himself has aligned with Mike Huckabee. Nothing unusual about stars and poilticians except that Huckabee is a former Baptist minister who appeals to evangelicals.  He crows about the Norris endorsement and appearances.  But how does he feel about MLK and the World Combat League, and exactly what that represents?  The stock market has only been up two days so far this year.  May the Delta Force be with you!

Pleae read Mario Bartiromo’s interview with Ken Lewis, CEO of Bank of America.  You will recall that Bank Of America BAC bought Countrywide Finance CFC with a stock purchase. That is ,they exchanged .18 shares of BAC stock for CFC stock.  Previously B of A had invested $2 Billion in CFC. Maria asks if BAC felt it had to purchase CFC to protect its original $2 B investment. Why did Maria ask that questinon?

This sets up a discussion of the order of creditors.  It is necessary to understand that to grasp the importance of her question. 

Plea read Mario Bartiromo’s interview with Ken Lewis, CEO of Bank of America.  You will recall that Bank Of America BAC bought Countrywide Finance CFC with a stock purchase. That is ,they exchanged .18 shares of BAC stock for CFC stock.  Previously B of A had invested $2 Billion in CFC. Maria asks if BAC felt it had to purchase CFC to protect its original $2 B investment. Why did Maria ask that question?

This sets up a discussion of the order of creditors.  It is necessary to understand that to grasp the importance of her question.  It might be a good idea to go back and read my post from 1/5/08.  This presents the order of creditors in liquidation.  But the point is the BAC purchased a stake in CFC with preferred stock. So they will be paid before the common stock holders. BAC research indicated that there was enough good assets that even with more sub prime write offs, there would be adequate assets to pay them off, though probably in kind in my opinion.  I am suggesting that BAC would likely get the mortgages rather than cash in such a bankruptcy of CFC.  I made the point in  Intermed ACCT 3120 that preferred stock made sense for a bank to issue as it did not have to be re paid and offered financing at a fixed fee.  The other side of the coin is that it makes sense as an investor because one stands in line at the liquidation window before the common stock holders.

Maria also asks if Ken thinks CFC will go bankrupt, ie, before the transaction is concluded. He says no.  Well CFC closed Friday at $4.93 down from over $40 a year ago. That is a loss of over 80% of the stock’s value. Okay, now, how much equity loss in the overall stock market doe that represent?  How much ‘paper wealth’ has evaporated in the last year? How would you calculate that?  Can someone post an answer to that question here on the blog?

Given the number of students in Intermed I and MBA, let’s have you write one article and post it and write one comment on someone else’s  article, the higher enrollment will not make it possible for you or me to read them all.

Whew, we finished our first week of the spring semester.  I have enjoyed meeting the new faces and getting re acquainted with the familiar.  I am usually very available during the week M-Thursday, I teach T R 9:30-12:20.  If you would like some tutoring at other times, just give me a buzz thru e mail and we can arrange a time, and not just a one time visit, I am here to help.

Yes you will be writing more this semester but I think that will help us form a stronger bond.  And it should extend the classroom beyond the usual twice a week format.  I have recently upped my interest in digital photography.  I am noticing the number and extent of interactive forums for digital photography in general and camera brands in particular.  No waiting for a monthly magazine, folks literally around the world are corresponding in a real time asynchronous manner, no wonder newspapers are for sale.

I mentioned the value of subscribing to Business Week. I just got my 1/28/08 copy, they usually arrive every Saturday. So let me take a quick run through and highlight a few things to give you a flavor of what I mean. I am not compensated in any way by the magazine or its owner McGraw Hill.

Prof Elam will be designated by PE, my personal take on the item

IBM is rebuilding to that teams around the world, read in different places at the same time, can work together more efficiently,

PE Gee what a great idea, and profits jumped 24%

The stock market tanked on the opening after INTEL earnings came out-up 15% but not enough to make folks happy

PE In a bear market, all news is bad news!

More on interactive as I mentioned, the Burger King ads showing actual employees telling actual customers that a whopper is not available are the best recalled ads in five year

PE Reality works, more examples of real time shared experiences asynchronously

Doing a presentation on Autos, see page 13 of this issue, great graphs, efficiency noted in particular and to teams in general, good example of graphical depiction of data

PE I must be going soft giving out all these tips

ON the Businessweek.com Apple introduces new products at annual macworld conference,

PE Design as I said in class, design  is key

Britain Lives it Up For the first time since 1885 British GDP per capita passes the US. Lower corporate taxes, , an ind Central bank, looser rules on hire and fire and the weak dollar pushed Britain up

PE I have been reading British websites and noticed how many of them have the much more expensive camera, I bought an OLY 510 for 650 bucks, but I am reading about Brits buying the $1695 USD E 3 for personal shooting, my take, someone over there is making disposable income

Maria Bartiromo interviews Ken Lewis of B of A on why they bought CFC

PE He says the govt did not urge them to buy CFC, does anyone believe that?

More on home equity woes for the consumer, an interesting ad for business in Madrid Spain and Turkish Airlines

PE Globalization and embracing a capitalist model of lower taxes and easing of restrictions and regulations  is finally bringing former mediocre economies into the bigger leagues, too bad we can’t do that here….

L Oreal recruit using a game, MSFT opens in Canada to skirt visa laws, perks vary by culture, young Indians want more NOW

PE Jim Rogers traveled the world in  his books  Investment Biker and Adventure Capitalist making theses observations several years back….

New Breakthrough What If Game, What Would Apple Do?  Article says many companies brainstorm by trying to guess how Apple would handle a problem, answer a more elegant design, and page 70-71 World’s Outstanding Chinese Designer

PE See I told you so, DESIGN!!!!!!!!!!!!!!!!!!!!!!!!!!!

Two year colleges woo foreign students

PE  I think we are getting closer and closer to finding out just where elasticity of demand cuts in on attending higher ed versus community college

Lincoln Ok, if a Mercedes is a taxi in Germany a Lincoln can be a taxi and a great luxury car

PE, Well a slower than Christmas Mercedes diesel is a taxi but that is a world away from an AMG high powered two seater which Lincoln has never made, Ford should keep Lincoln Town Car as is, Volvo sold their slab sided 240 for twenty five years, do the same with Lincoln now that Checker is out of the picture

Jack Welch comments on surveys about continuous improvement, or CQM our topic in the next few weeks in managerial, he says he is all for such surveys from employees if they are done right

PE Okay Jack, how many employees did you survey at GE as you shipped their jobs off to India, did you get good feedback from them on that, note GE stock has been going down to sideways since you left….

Neiman Marcus is not a public company but it does have publicly owned high yield bonds. These were used by the hedge fund to purchase the company.  Click on the hyperlink and it will take you to a list of presentations. Click on J P Morgan D Bank or Lehman.  It will take you to a professionally done presentation on NM.  Study expectially the financial secion to learn some great tips for a great presentation.

Right on cue for your first writing assigment, Fed Chief Bernake called for a stimulus package from Congress. With 435 which is every representative, one third of the senators and a wide open presidential field, no incumbent, do you think we will get one? 

But if so what kind?  Does a few hundred bucks to the ‘poor’ solve a problem?  I won’t say anything more but do read the various articles I have posted as well as doing some research yourself.  What is your position?   

WEB CT was working this afternoon. I posted the syll, assignments sheets, and first topic for discussion on all classes. In addition  I initiated Homework Manager for ACCT 3120 and 3270. They are accessed at

ACCT 3120

http://mh2./brownstone.net/classes/Acct3120-Sec091/

ACCT 3270

http://mh10.brownst6one.net/classes/Acct3270Sec090/

To purchase Homework manager got to the textbook site either

mhhe.com/spiceland4e

mhhe.com/garrison12e

on  the left hand side you will see MH Homework Manager between Coach and iPod content. Click there and it will take you to a page for HM.  There you will click on the book title on the right hand side, either
spiceland 4e or garrison 12e  and find the instructions for paying and getting your log in code.  The students in my previous Intermed I and Acct 3270 classes are both familiar with this if you know one of them. You will have time to get going on this if you are having trouble getting started. But plan on getting started.

Yep you heard it right, the Oprah Network.   Discovery Health Channel was not doing so well, what to do, well call in a real media performer.  Oprah moves from tv show to her own network, as she says this will allow her to project her vision 24/7.  This is a pretty rarefied level occupied by Ted Turner, Rupert Murdoch, BET.  What is the business model that has brought Oprah so much success, your take?  My point is, what can we all learn from her success as potential entrepreneurs?