I write in several venues including a news paper column, and have for years.  Last year I commented that if someone would embrace the Fair Tax it would catapult thier candidacy to the top.  Well, Mike Huckabee has.  And guess what, he had gone from nowhere to near leader of the Republican pack in a matter of weeks.  Now it will NOT be my policy to endorse candidates on this blog. However this is an issue of tremendous importance to the accounting profesion, who so far have said exactly nothng about it.  Here are some comments from Neal Boortz, one author of the Fair Tax book, abut it, make what you will about his other comments.   More on his books Amazon listing on Fair Tax. The theme emerging in both parties is change and youth.  Will Obama embrce a simpler system?

Big Picture, the emergence of this as an issue will or may cause other candidates to have to defend the gosh awful tax code we have now, how can they? 

In fairness here is a summary of Steve Forbes Flat Tax. Preview the book here.

What i want to stimulate is a discussion on taxation.  Do you like the current system of lobbyist influence peddling called a tax system, you can see how I feel about it!  What would you do?  Better yet, how about linking federal spending to 10% of GDP as Tom Sowell has suggested, at least that would slow expenditures.

We did not have to get very far into 2008 for an out of the park ethics story.  And this one happened right in Garland, TX. (That is NE DFW).  The Mother of a six year old ‘helped’ the girl craft a story claiming that her Dad had been killed in Iraq. This was her ‘essay’ submitted in a contest to win both tickets to see Hannah Montana, the latest iteration of Mouseketeers, Spice Girls, et al,  and a ‘makeover’. The girl in question is six years old.  A Makeover, a six year old is so awry she need a makeover?

Turns out the soldier in the essay does not exist, amid all the reports there is no report about where the biological Dad actually resides (this seems to be a common thread in such stories), and so the tickets were given to someone else.  In a moment of attrition or some sort of bizarre publicity grab, the Mom appears on the Today show with her lawyer and psychologist to say she had made a mistake.  Worse Mom’s sister declared that the youngster did not know the essay had to be factual, so it’s OK, right?

Gee where do we start here?

What do you suppose Mom told the youngster about why the tickets were going to someone else?

Imagine Mom actually helping the daughter ‘write’ the essay…….

Is there any line in the sand such a person would not cross for personal gain?  Placing such emphasis on concert tickets is no way to meld a life vision for a child.  Do you suppose Mom ever discussed seeing the Grand Canyon at dawn or Yosemite Falls at sunset, now there are two nature concerts worth attending.

Hannah Montanna tickets, a makeover at six years old, please if we are going to ban trans fats, let’s ban sub majority age beauty contests, remember the teen Miss South Carolina discussing geography?  by the way, Brittany Spears amid a bevy of ambulances to her home, lost custody of her kids this weekend, her sixteen year old sister with a tv show is pregnant, their Mother has delayed publishing a book on how to raise show business kids, the coverage of these events parallels the Presidential Primary coverage, do we have a role  model problem here?

A lie is a lie, say it ain'[t so Joe was the plaintive cry of a small child wanting to know if in fact the 1919 World Series was fixed.  Now 90 years later we have stunts like this, Mike Vick, and steroids in pro sports.

The three legs of fraud are opportunity, rationalization, and pressure to win at any cost, this one seems to fit the bill. Your Thoughts?

Class

I have posted this from another source. It is a great summary of the equity section of the balance sheet that we will study this semester in Intermed II. And for those that need a brush up, well here it is. Remember I have also posted links to learn more about stocks and bonds. I make not comment on specific recommendations the author has or has had in this article, just focus on the part about where common equity is in line.

Dennis Elam
—–

Editor’s note: In the September 18 edition of DailyWealth, we published an adapted version of Dan’s Ferris’ September Extreme Value advisory. By showing how far down the ladder the common stock owner is in event of a company liquidation, Dan illustrated why focusing on stocks with high-quality assets, low-debt balance sheets, and great business franchises is essential when it comes to common stock investments.
Equity Steak
Originally published in the September 18 edition of DailyWealth
I like you.
You and I are birds of a feather… I feel privileged to be able to write to you. I’m grateful for the attention you give to my ideas and advice. And given the smallish size of the flock, I hope we’ll continue to stick together.
So, please don’t take the following personally. I’m only making a point…
But let’s face it… As an investor, you just aren’t that important.
For starters, you’re an outsider. Sure, the stock you buy means you own a piece of the company. But let’s be realistic. You have no idea what’s going on in its hallways, meeting rooms, and corner offices minute by minute, day by day. Management could be swinging from the chandeliers. (How do you know there aren’t any chandeliers?)
Not only are you an outsider, you’re passive, too. You get to vote your shares, but otherwise, management doesn’t want to know and certainly doesn’t really care what you think. In management’s view, you, the shareholder, are best neither seen nor heard.
And while you may have the potential to vote with the majority, wielding whatever power you possess, you are the tiniest minority of all: the individual shareholder. You are a gnat on the windshield of the companies in your portfolio.
Putting a more technical face on it, the publicly traded common equity we typically discuss (and discuss and discuss…) represents a residual claim on earnings and assets.
Note the word residual, as in residue. You know what residue is. It’s the stuff you have a bear of a time cleaning off the bottom of the pan. After you take the meat out and use the drippings and scrapings to make the sauce, there’s a little bit of stuff stuck to the bottom.

That’s the residue.
In other words, that’s the equity. Not the meat, or the drippings, or the scrapings. The residue. The stuff nobody wants.
Well, if the equity is the residue, then what are the steak and the sauce? What comes before equity? The answer, it turns out, is “just about everything and everyone.” The following list shows you the order of claims on a corporation’s assets in the event of liquidation. Note the position of the common-equity holder. Now that’s what I call residue.
1) Secured creditors paid when pledged property is sold or refinanced, then
2) Unpaid wages, then
3) Taxes, then
4) Trade creditors, then
5) Unsecured debt holders, then
6) Subordinated unsecured debt holders, then
7) Preferred stockholders, and finally, after all these other claims are met,
8) Common stockholders get whatever is left.
You are eighth in a line of eight. Every common-equity holder should see this list, study it, and remember it forever. This list of priorities is why I’ve often been attracted to stocks with little or no debt and way too much cash or other high-quality liquid assets.
And claims on earnings are an even wispier notion than claims on assets. Before a corporation can pay common dividends – if it even wants to – it has to pay all of its interest payments and other expenses.
Makes you appreciate a world-class dividend payer like ExxonMobil that much more.
Once you start thinking about yourself as a subordinated unsecured creditor, you’re really just making sure you’ll get paid.
That’s why we recommended Alexander & Baldwin a few years ago in my advisory Extreme Value. Alexander & Baldwin owns 90,000 acres of raw land in Hawaii. At the time we bought, you got the land at a discount, and its business operations for free.
We recommended American Real Estate Partners for similar reasons. It was selling for 75% of book value a few years ago. It was easily worth much more than book value. It was around $20 a share then. It’s more than $110 a share now, and selling for about three times book value. Today, it owns even more undervalued assets. And it still has more cash than debt. It’s a very safe stock to hang on to.
We analyzed the position of Borders from the same perspective and realized that its debt is secured in part by its inventory. Borders book inventory can be returned to the publisher at cost, so there’s a firm bottom to its value. Not what you’d expect, given that today’s $39.95 hardbacks will be in the bargain bin for $5 in a few months. Even if the worst happens at Borders, there’ll still be some value for the shareholder. We made sure we’d get paid.
That’s how a creditor thinks. We’re not predicting earnings. We’re not figuring out the next hot technology. We’re not even worried about the business having some great competitive advantage. We’re just looking at the business through the eyes of a subordinated unsecured creditor. That’s how we get safety, and staying safe is how you keep yourself in a position to take advantage of the big gains that come from stocks like Alexander & Baldwin and American Real Estate Partners
If this were what you got every time you scraped the bottom of the pan, you’d be happy to let others eat the steak.
Good investing,
Dan Ferris
.
________________________________________

ALL CONTENTS OF THIS E-MAIL ARE COPYRIGHT 2008 BY STANSBERRY & ASSOCIATES INVESTMENT RESEARCH. ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF PORTER STANSBERRY.
Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to five years in prison and $250,000 in fines.
DISCLAIMER:This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. Stansberry & Associates Investment Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry & Associates Investment Research (and affiliated companies) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.
You’re receiving this email at bob.russell@suddenlink.net. If you have any questions about your subscription, or would like to change your email settings, please contact Stansberry & Associates at (888)261-2693 Monday – Friday between 9:00 AM and 5:00 PM Eastern Time. Or if calling internationally, please call 410-895-7964. Stansberry & Associates Investment Research, 1217 St. Paul St., Baltimore, Md 21202, USA
If you wish to contact us, please do not reply to this message but instead go to customerservice@stansberryresearch.com. For faster service, please enroll or log in to your account. You will find a drop down menu with topics already created to expedite your email. Replies to this message will not be read or responded to. We look forward to your feedback and questions however, the law prohibits us from giving individual and personal investment advice. We are unable to respond to e-mails and phone calls requesting that type of information.

Class

I have posted this from another source. It is a great summary of the equity section of the balance sheet that we will study this semester in Intermed II. And for those that need a brush up, well here it is. Remember I have also posted links to learn more about stocks and bonds. I make not comment on specific recommendations the author has or has had in this article, just focus on the part about where common equity is in line.

Dennis Elam
—–

Editor’s note: In the September 18 edition of DailyWealth, we published an adapted version of Dan’s Ferris’ September Extreme Value advisory. By showing how far down the ladder the common stock owner is in event of a company liquidation, Dan illustrated why focusing on stocks with high-quality assets, low-debt balance sheets, and great business franchises is essential when it comes to common stock investments.
Equity Steak
Originally published in the September 18 edition of DailyWealth
I like you.
You and I are birds of a feather… I feel privileged to be able to write to you. I’m grateful for the attention you give to my ideas and advice. And given the smallish size of the flock, I hope we’ll continue to stick together.
So, please don’t take the following personally. I’m only making a point…
But let’s face it… As an investor, you just aren’t that important.
For starters, you’re an outsider. Sure, the stock you buy means you own a piece of the company. But let’s be realistic. You have no idea what’s going on in its hallways, meeting rooms, and corner offices minute by minute, day by day. Management could be swinging from the chandeliers. (How do you know there aren’t any chandeliers?)
Not only are you an outsider, you’re passive, too. You get to vote your shares, but otherwise, management doesn’t want to know and certainly doesn’t really care what you think. In management’s view, you, the shareholder, are best neither seen nor heard.
And while you may have the potential to vote with the majority, wielding whatever power you possess, you are the tiniest minority of all: the individual shareholder. You are a gnat on the windshield of the companies in your portfolio.
Putting a more technical face on it, the publicly traded common equity we typically discuss (and discuss and discuss…) represents a residual claim on earnings and assets.
Note the word residual, as in residue. You know what residue is. It’s the stuff you have a bear of a time cleaning off the bottom of the pan. After you take the meat out and use the drippings and scrapings to make the sauce, there’s a little bit of stuff stuck to the bottom.

That’s the residue.
In other words, that’s the equity. Not the meat, or the drippings, or the scrapings. The residue. The stuff nobody wants.
Well, if the equity is the residue, then what are the steak and the sauce? What comes before equity? The answer, it turns out, is “just about everything and everyone.” The following list shows you the order of claims on a corporation’s assets in the event of liquidation. Note the position of the common-equity holder. Now that’s what I call residue.
1) Secured creditors paid when pledged property is sold or refinanced, then
2) Unpaid wages, then
3) Taxes, then
4) Trade creditors, then
5) Unsecured debt holders, then
6) Subordinated unsecured debt holders, then
7) Preferred stockholders, and finally, after all these other claims are met,
8) Common stockholders get whatever is left.
You are eighth in a line of eight. Every common-equity holder should see this list, study it, and remember it forever. This list of priorities is why I’ve often been attracted to stocks with little or no debt and way too much cash or other high-quality liquid assets.
And claims on earnings are an even wispier notion than claims on assets. Before a corporation can pay common dividends – if it even wants to – it has to pay all of its interest payments and other expenses.
Makes you appreciate a world-class dividend payer like ExxonMobil that much more.
Once you start thinking about yourself as a subordinated unsecured creditor, you’re really just making sure you’ll get paid.
That’s why we recommended Alexander & Baldwin a few years ago in my advisory Extreme Value. Alexander & Baldwin owns 90,000 acres of raw land in Hawaii. At the time we bought, you got the land at a discount, and its business operations for free.
We recommended American Real Estate Partners for similar reasons. It was selling for 75% of book value a few years ago. It was easily worth much more than book value. It was around $20 a share then. It’s more than $110 a share now, and selling for about three times book value. Today, it owns even more undervalued assets. And it still has more cash than debt. It’s a very safe stock to hang on to.
We analyzed the position of Borders from the same perspective and realized that its debt is secured in part by its inventory. Borders book inventory can be returned to the publisher at cost, so there’s a firm bottom to its value. Not what you’d expect, given that today’s $39.95 hardbacks will be in the bargain bin for $5 in a few months. Even if the worst happens at Borders, there’ll still be some value for the shareholder. We made sure we’d get paid.
That’s how a creditor thinks. We’re not predicting earnings. We’re not figuring out the next hot technology. We’re not even worried about the business having some great competitive advantage. We’re just looking at the business through the eyes of a subordinated unsecured creditor. That’s how we get safety, and staying safe is how you keep yourself in a position to take advantage of the big gains that come from stocks like Alexander & Baldwin and American Real Estate Partners
If this were what you got every time you scraped the bottom of the pan, you’d be happy to let others eat the steak.
Good investing,
Dan Ferris
.
________________________________________

ALL CONTENTS OF THIS E-MAIL ARE COPYRIGHT 2008 BY STANSBERRY & ASSOCIATES INVESTMENT RESEARCH. ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF PORTER STANSBERRY.
Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to five years in prison and $250,000 in fines.
DISCLAIMER:This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. Stansberry & Associates Investment Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry & Associates Investment Research (and affiliated companies) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.
You’re receiving this email at bob.russell@suddenlink.net. If you have any questions about your subscription, or would like to change your email settings, please contact Stansberry & Associates at (888)261-2693 Monday – Friday between 9:00 AM and 5:00 PM Eastern Time. Or if calling internationally, please call 410-895-7964. Stansberry & Associates Investment Research, 1217 St. Paul St., Baltimore, Md 21202, USA
If you wish to contact us, please do not reply to this message but instead go to customerservice@stansberryresearch.com. For faster service, please enroll or log in to your account. You will find a drop down menu with topics already created to expedite your email. Replies to this message will not be read or responded to. We look forward to your feedback and questions however, the law prohibits us from giving individual and personal investment advice. We are unable to respond to e-mails and phone calls requesting that type of information.

Editor’s note: We conclude our Twelve Days of Christmas with a reader favorite… our infamous “Letter from the Chairman of General Motors,” by Porter Stansberry. For one of the most talked about essays written in our industry this year, read on…
More from the Chairman of General Motors…
Originally published in the November 8 edition of The S&A Digest
Dear fellow shareholders:
Being the captain of the Titanic is no fun.
I am the CEO and the chairman of General Motors, what was, until recently, one of the largest and most powerful corporations in the world. For decades, GM was a model of capitalism. Our bonds were the highest quality you could purchase. Our dividend was the safest. Our jobs were among the best in America. Our operations shaped accounting standards. What was good for GM was said to be “good for America.”
Today, only a thin veneer of optimistic statements, crafted by my lawyers so that they can’t be definitely called “lies,” keeps this firm from slipping into bankruptcy.
For example, I told the world in our press release we saw “steady improvement in our financial results” and “strong evidence that our commitment to great cars and trucks is being embraced by consumers around the globe.” Luckily for me, “steady improvement” and “strong evidence” are meaningless puffery that can’t be proven to mean one thing or another.
Instead of living the life of a captain of industry – where I’d take credit for the hard work of our thousands of employees – I find myself leading an expansive game of financial charades. I have become nothing more than a dressed-up street hustler, running a shell game on you, our loyal shareholders. But at least I have this outlet. As I have done for nearly a year, I will again tell you the sad truth about our operations and our helpless financial situation.

————————————-
First, as I have told you before, “We have infrastructure and employee obligations that outpace what we can afford given our greatly reduced profit margins and debt load.” Specifically, we have long-term debts of $36 billion, retirement benefit obligations of $60 billion, and another $16 billion in various other long-term liabilities.
How did we end up in this position? It didn’t happen overnight. For 19 out of the last 20 years, GM operated at a capital deficit. We simply didn’t make enough money selling cars to maintain our asset base, make new investments in future capacity, and pay our cash dividend. If you look at the numbers carefully, you see our total capital deficit over the last 20 years was $275 billion. After we worked through our accumulated savings, we began borrowing money – more and more of it every year.
So far this year, we’ve paid approximately $4 billion in interest on these various liabilities. I estimated, in an earlier letter to you, that we would require about $5.81 billion in cash from operations merely to pay the interest on our debts. I still believe that’s an accurate forecast. Our global cost of borrowing continues to increase, as I thought it would. It now costs us 6.3% a year, on average, to borrow money, up from 5.84% last year. As more debts “roll over,” this number will increase until it eventually strangles us. We are trapped, unable to let go of our legacy obligations and unable to pay for them.
We know we will not produce anything like $6 billion from operations this year. Likewise, it is very unlikely we will ever generate regular, ongoing profits from operations in excess of our interest expenses. As a result, our accountants have forced us to “write down” the value of most of our tax losses, which had been on our books as an asset. We’ve told the public this doesn’t really matter because the $37 billion charge is a “noncash” expense.
It does matter though: It means we know we are unlikely to ever again record a profit. If we had any reasonable expectation of reaching profitability, we would not have been required to take the write-off. (You won’t hear me explain this fact anywhere else…)
Our core problem is simple enough to understand: We can’t make enough money selling cars to pay for our debts, or even our interest payments .
This quarter, on a worldwide basis, we earned $122 million from our ongoing automotive operations, which we claim is a terrific accomplishment. In fact, we make a pitifully small amount of money from selling cars – even in the huge global boom we’re now experiencing. You should remember: Our third-quarter revenues have never been bigger. Our rival, Toyota, which sells essentially the same number of vehicles, posted operating earnings of $11.2 billion! That’s a record for Toyota and a 16% increase over last year. Investors ought to be seriously concerned about the future of the company when, even in a quarter of record global car sales, GM can’t turn a profit.
Things are especially tough on us in the developed markets. We lost $248 million on our North American operations and another $90 million in Europe. This doesn’t include all of the corporate overhead, legacy costs, and most of our interest expense.
In total, we lost $2.5 billion – in cash – on our automotive operations in the quarter.
As I’ve explained before, our only chance to avoid bankruptcy was to experience a big jump in the total number of cars sold and to cut expenses to the bone. That hasn’t happened. Our total worldwide car production has actually fallen year over year. Likewise, our global market share continues to slip, bit by bit. In 1992, we made 30% of all the cars in the world. Today, we make 13.3% of all the cars in the world, down from 13.6% last year.
As our production falls, the scale of our business shrinks, making it harder and harder to earn a profit on every car sold. Production is very likely to continue to decline. Even after all of the plant closures and cutbacks, we are still operating below 90% of our current capacity.
I know… all of this seems like bad news. But actually, our automotive business is only slowly bleeding to death. The big hemorrhage is in mortgages…
Our CFO was foolish enough to tell securities analysts that GMAC was “leaning away” from residential mortgages. Not exactly… Actually, GMAC lost $1.6 billion, mostly on subprime mortgages, in the last quarter. Our share of these losses totaled $803 million. We actually don’t know how much more we will lose in this business going forward, but as our write-off of those tax assets shows, we certainly don’t expect to make any money here for a long time.
What does all of this mean? It’s not good news. Let me show you the cold, hard facts.
According to our most up-to-date balance sheet, we have about $37 billion in cash and receivables. That sounds like a lot of money. But we have matching liabilities for all of these assets – and more. Over the next 12 months, $5 billion of our long-term debt will come due. We have current accounts payable of $30 billion and other accrued expenses that mature in the next year of $34 billion. All totaled, we owe $70 billion within the next 12 months. (That’s not including all of the rest of our long-term debt, pension liabilities, etc.)
If you have $34 billion in your checking account and you’ve got $70 billion worth of bills on your desk, you’re not exactly “cash rich” are you?
How will we pay for these obligations? How will we come up with the money we need to finance our long-term debts? There aren’t any easy answers. And all of the possible solutions will be extremely painful to existing shareholders.
The simple fact is, we’re going bankrupt. It’s only a matter of time before our accountants force us to insert “going concern” language into our filings. That means they won’t approve our audit unless we admit publicly that we know we’re heading for a bankruptcy filing.
That won’t be a good day to be a shareholder.
Best regards,
Your Chairman
________________________________________

ALL CONTENTS OF THIS E-MAIL ARE COPYRIGHT 2008 BY STANSBERRY & ASSOCIATES INVESTMENT RESEARCH. ALL RIGHTS RESERVED: REPRODUCING ANY PART OF THIS DOCUMENT IS PROHIBITED WITHOUT THE EXPRESS WRITTEN CONSENT OF PORTER STANSBERRY.
Protected by U.S. Copyright Law {Title 17 U.S.C. Section 101 et seq., Title 18 U.S.C. Section 2319}: Infringements can be punishable by up to five years in prison and $250,000 in fines.
DISCLAIMER:This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. Stansberry & Associates Investment Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry & Associates Investment Research (and affiliated companies) employees and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.
You’re receiving this email at bob.russell@suddenlink.net. If you have any questions about your subscription, or would like to change your email settings, please contact Stansberry & Associates at (888)261-2693 Monday – Friday between 9:00 AM and 5:00 PM Eastern Time. Or if calling internationally, please call 410-895-7964. Stansberry & Associates Investment Research, 1217 St. Paul St., Baltimore, Md 21202, USA
If you wish to contact us, please do not reply to this message but instead go to customerservice@stansberryresearch.com. For faster service, please enroll or log in to your account. You will find a drop down menu with topics already created to expedite your email. Replies to this message will not be read or responded to. We look forward to your feedback and questions however, the law prohibits us from giving individual and personal investment advice. We are unable to respond to e-mails and phone calls requesting that type of information.

GM – General Motors Corporation

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Several years back I wrote a piece for the SWT School Paper. I suggested there was a need for a cheap simple slimmed down laptop for use by students.  Word processing, internet, simple spreadsheet would do the trick.  Now comes the Asus Eee PC.

Read the review at Camera Labs Report.  This Taiwan company uses Linux instead of the power hungry mb consuming Windows XP, and of course handily avoids having to pay MSFT for it.  The unit weighs less than a kilogram. And it cleverly uses 4GB of flash drive instead of a more expensive hard drive.  Additional memory is of course available with the now inexpensive USB portable hard drive back up units.  At a price of $399 it looks like we have a winner here. The screen at seven inches and keyboard can actually be used unlike thumb accessible cell phone keyboards.   I have not seen one yet but will check it out at the first opportunity.

With units like this utilizing Linux, I am mystified why MSFT stock is up over $35.  Yes they do well with their game box but I have to wonder if XP and my new nemisis, 2007 VISTA, are finally about to have some real competition.  Hmmm, could Apple harness the flash drives in its iPod to do the same thing?

George Will describes the phenomenon that is MCD.  Most of what we study in Managerial Accounting is on display in MCD every day.  The design of the counter to minimize waiting, the design behind the counters to enable the food to be bagged quickly, the 90 second wait between the order at the drive in window and its delivery, the photo of the Meal Deals, it’s all there.  Think about these things as you visit fast food restaurants.   How many concepts of JIT, TQM, queing theory can you see in action?

At the McDonald’s website notice the first thing  you have to do is pick a country,and notice how many choices you have.

Yet another pointy head has offered yet another bad idea cloaked in good intentions-check out

Let’s Close the Gap in Education. . One of our core ideas at UNT Dallas is to value critical thinking.  Well here is a great chance to exercise some critical thinking, read the article and here we go.

The author states that overpaid CEOs and investment bankers pay inheritance and income taxes so their wealth diminishes over time.  Hello, has the wealth of the Kennedys or Rockefellers diminisehed over time?  Who are all those well heeled dripping with diamonds old folks in Town and Country magazine anyway.  Robert Rubin who lately presides over the train wreck formerly known as Citicorp boasted he made $100 M while he was on Wall Street at Goldman Sachs.  Does anyone think Robert’s wealth is going down? Such folks hire the best cpas and tax attys to make sure this does not happen. 

Leave it to a liberal to punish success. Spot someone or something with money and by golly, it is evil.  Mr. Allen’s target is the trust funds of wealthy colleges.  He charges that places like Harvard and Princeton use their wealth to ‘raid and scoop up’ the best teachers at poorer colleges.  And they offer the best high school students the best deals in terms of scholarhsips.  Without further ado, he deems that this should not be happening, something must be done.

Now stop and think, what are the assumptions here?  At a minimum, wealth equals academic excellence, that teachers from poorer schools actually have a chance of being hired at places like Harvard, and that ‘fairness should reign supreme.’  Somehow Mr. Allen will manage to be ‘fair’ in re distributing the ill deserved wealth of Harvard et al and in classic Robin Hood fashion, equitably let the other schools have their ‘fair’ share.

Well, let’s please put a stop to the nonsense that Harvard et al are ‘better schools.’  Yes the teachers are paid more and are more likely to come from a name school themselves. Please remember these are the teachers that chased Larry Summers out of his Harvard Presidency for offering some down to earth reasons for the lack of more female teachers. The notion that Harvard is snooping around Tarleton or Sam Houston State is so laughable I can’t believe he made the statemet.   But what Harvard et al really all about is not better education but better fraternity.  John Kennedy (Jack and Jackie’s good looking late son) roomed in a house at Brown with Cristina Amnanpour.  Her husband has worked for the State Dept, see how this works?  Admission to Yale is tantamount to a degree from Yale.  Bill Clinton did not arrive for his first year at Yale Law until after the Presidential election in 1972, and he passed the semester, how did that happen?  And go figure, think of the best teacher you ever had, was he or she the best paid?  Denzell Washington has just directed a fine movie about the Wiley College Debate Team in the 1930s, you can bet the Wiley endowment could have used some help from Harvard, but win they did.

Many more colleges are gearing up their development programs and most will not ever catch the well to do Ivy League Schools.  But take their endowment earinings by tax? Come on!  They earned it, they should get to keep it. And besides such money can fund projects far beyond the reach or the typical small private or even large state university.  And, okay, let’s suppose you did pass this tax on endowment earnings? What is the threshold of a rich endowment?  Tens of millions, hundreds, a billion, what?  That will surely be an arbitrary decision.

Okay, having made that arbirary decision of the sub endowment schools, who is eligible?  Will Mormon and Catholic schools be on the list, or Baptist and Methodist?  How about for profit schools like University of Phoenix, they are certainly serving lots of folks!  Large state schools, small state schools, on line or brick and mortar, the list goes on .

This kind of thinking is the same that took money from all of us to build that Bridge to Nowhere in Alaska for Ted Stevens so it could serve a few dozen Eskimos.  No thanks Herb, Harvard does lots of things I don’t like, but it still does not give me the right to steal their endowment income.

Robert Samuelson discusses the rise of mercantilism. This 19th Century promoted the idea of ‘put us first’ to build import income. This also led to tariffs to make sure work was done in our country not in their country.  Example-if you have been to Cancun you probably rode in either a VW or Nissan taxi, the reason is that those cars are made in Mexico.  Mexico puts high tariffs on cars not made in Mexico to give the advantage price wise to the home made product. The result is fewer choices for Mexicans.

So the idea of free trade after the disastrous Smoot Hawley tariffs of the 1930s seemed to worsen the Depression. Now however we are going back to the me first doctrine. China keeps its currency cheap to make its goods cheaper, the result is more manufacturing in China.  Chavez sells discounted oil to his friends.  How long will Putin be ‘friendly’ to Europe in terms of natural gas sales.

This is a good article that links economics with globalization.

The Heritage Foundation has complied a list of Congressional Pork Projects.  No matter where you live you paid for them.  View the list here. Pork is a synonym for bringing home the bacon, getting Federal Money to finance local projects, which Congress uses to get re elected.

Is this what Jefferson had in mind?