Those automotive Whiz Kids Click and Clack used to pontificate that they were going to offer a Capital Depreciation Fund, guaranteed for a loss if that is what one wanted, it would so simplify portfolio management.  Well wouldn’t you know it, farce become reality as Bear Stearns has done just that. BS (hmm, interesting abbreviation don’t you think?) waited until this blog had warned repeatedly about the impending real estate collapse. Then they started a fund that would invest in bonds backed by sub prime mortgages. Well if you are a regular reader of the blog, you know what has been happening, collapse, that’s what. Now with the fund down over 20% the managers have suspended redemptions to avoid taking further losses on having to sell bonds at losses to match the redemptions.  Yep you read that right, as an investor, you can’t get out, rather like Social Security come to think of it.

So, once again, the study of finance and accounting along with some basic economics, always our theme here, can really pay off.

Well let’s check in on the DISD, first it was the credit card scandal, then the fixing of a computer services contract, now it’s cheating on the TAKS test, but to their credit, not just in DISD.  Here is the story from the DMN in depth study.   It is allso interesting to read how the study on detecting cheating was done, a pattern of similar WRONG answers is sought, seems those patterns which recur are extremely remote, statistically at least but are happening all the time.  So when everyone’s reputation, salary, bonus is on the line, cheating becomes rampant. Apparently bit time CEOs are not the only ones subject to temptation.

Here I go again on the importance of DESIGN.  A lead article in the current Business Week discusses the culture at 3M.   3M  has been known as a creative company famous for innovative solutions, like the Post It Note, or sticky!  So how do you continue to innovate and do it on a budget, Good question and a good article.

Here is an interesting article from Career Services at the Univ or Michigan.   Please note that the career development officer states that communication skills and the ability to lead are seen as all important. This is why we had oral presentations in class. This is also why I harassed,cajoled, encouraged, urged, jumped up and down, rang a bell, etc.  at least constructively I thought, you to do better!

Note the avg starting salary was $94K, you can bet that for that kind of money the students were prepared for their presentations…..

I mentioned an article during the grad class that laid out the real Ford balance sheet, the writer concluded that there was no value here.  And so here is another contrarian opinion suggesting that neither Ford nor GM is worth anything.  This writer mentions that a rumor has been floated that the Ford family might consider selling all its stock, incredibly the stock went up on this news.  If the Ford family is ready to bail, why wouldn’t everyone?

This is a good analysis of valuing a company and a must read for accounting and finance students.  Jerry Flint at Forbes has suggested that bankruptcy would not do them any good as most union workers are older and own their homes.  While the showdown at Chrysler with unions remains, this writer points out that unions difficulties are only part of the problem as GM and Ford have gone ever deeper in debt to try to show a profit. 

One of my profs in the PhD program frequently made a good point.  Next time you are with a group of people ask them what they are reading.  Interesting that several will not have an answer. So to make a few suggestions and hopefully hear what some of you are up to, here’s my latest reads.

Did you know Bob Newhart actually started out as an accountant?  Yep, true story, but he soon found he would rather make people laugh.  In  I shouldn’t Even Be Doing This  Bob chronicles his rise from obscure accoutant to obscure comic (all my friends were gettign married and I was still living with the folks) to standup (the button down mind of Bob Newhart) to major tv star. 

Peter Falk got a college degree but decided he didn’t like working for the government.  He switched to stage acting and then did some movies and television roles.  But as he says, it was the Columbo character that made his career. In the process he became his own producer and as you will read, a pretty fair script writer himself.  I found this one enjoyable, particualry his thoughts on that great black comedy, The In Laws  IF you have not seen that movie and can find it at the video store, a 1979 release, go for it, Ok Lupe, so It is not a recent movie.

Today I got Iacoca’s latest book on leadership, I will post a review later this weekend, so what are you reading, inside of course, too much rain to sit by the pool.  By the way, I checked all these out of the public library, that would be a big building full of books that you can check out and return for free, what a concept….

Has anyone ever really thought about a radical approach to cars, I mean something really different. Now that gasoline is $3 is it time to re think all that? As I have mentioned before, BMW brought out the Isetta at left in the 1950s. The radical styling and design would never be allowed today, the entire front of the vehicle opened to allow entry and exit.

But if one puts doors on an Isetta above then one has the Smart Car pictured at left.  It is coming to America courtesy of Roger Penske and we shall see how well it does.

Another popular small car now is the Mini, actually being produced by BMW who brought us the Isetta.  Look closely at the one on the left.  Notice anything?  This is not the current Mini but the original!  Notice how small it really is in comparison to the man standing next to it or the Jag XKJ behind it.  This is a 1950s design that was radical and innovative at the time. In fact, it was designed in Britain and established the baseline for what is the economy car today. Which is to say all the mechanicals are in the front, engine, transmission, driveline. The engine was turned sideways to save space and be parallel to the driven axle.  This leaves the rest of the vehcile for maximum space for passengers and gear. The wheels are pushed to the far four corners of the vehicle, again to maximize space.  And the wheels are small, these are only twelve inches in diameter, so they do not intrude on passenger space.  The result is an amazing amount of space in a tidy size. These were popular for racing and handling events known as auto crossing.  The roofs were painted white on the race cars so it was easier for the pit crews to spot their cars on the track. This proved popular and was copied for the passenger cars, and is still a feature of the modern mini.

The moral of the story?  First it is interesting that BMW, now a maker of luxury cars, was saved by producing an ultra economy car in the post war 1950s using motorcycle engines.  Now BMW purchased the rights to the British Mini and has popularized it again.  And now the Isetta is re born as the Smart Car, actually designed by Mercedes.  Funny how two luxury car makers ended up in the economy category.  There is a cycle at work here of going from economy to extravagance represented by 5,000 pound empty pickup trucks all over Dallas Texas.  Now we appear headed back, to the future or the past, goes around comes around as they say.

On May 12 2007 I posted a link that suggests the FASB is considering radically revising the current content of financial statements.  I checked with both Thomson and McGraw Hill on that.  Neither is expecting that kind of change any time soon, and apparently are skeptical it will happen. I was assured however that if it does, they of course wil be on top of it, and have revised texts to reflect the changes. 

I suspect it would take another financial meltdown Worldcom or Enron style to prompt such radical change.

ABV – Accredited in Business Valuation CGFO – Certified Government Finance Officer
AEP – Accredited Estate Planner ChFC – Chartered Financial Consultant
BVS – Business Valuation Specialist CIA – Certified Internal Auditor
CA – Chartered Accountant CISA – Certified Information Systems Auditor
CBA – Certified Business Appraiser CITP – Certified Information Tech Professional
CCM – Certified Cash Manager CLU – Chartered Life Underwriter
CCP – Certified Computer Professional CMA – Certified Management Accountant
CDP – Certified Divorce Fin Analyst CVA – Certified Valuation Analyst
CFA – Chartered Financial Analyst FLMI – Fellow, Life Management Institute
CFE – Certified Fraud Examiner LREB – Licensed Real Estate Broker
CFFA – Certified Forensic Fin Analyst MCSE – Microsoft Certified Systems Engineer
CFM – Certified in Financial Management PFS – Personal Financial Specialist
CFP – Certified Financial Planner

These are the certifications from which we can choose when updating our annual profile as CPAs, but hey, you can google. Accounting Certifications and there are others, like Certified Bookkeeper, as Larry the Cable Guy would say,

You believe that?

Looking back over the last couple of decades, it should be obvious that high tech has become the ‘in thing’ and surely most folks got rich investing there, right?  Well wrong, IT is a lot tougher than most folks think.  The latest example is COMP USA headquartered right here in Dallas.  This company has been taken private by its Mexican owners.  Now COMP is going to close half its stores.  Seems we need to focus on core customer concerns and not be everything to everyone.  Gee, Radio Shack just closed several hundred stores for about the same reason.  It is tough out there competing with Best Buy BBY and Circuit City CCY.

My point here is that we study a curriculum in business.  Getting it right is a combination of marketing and managerial accounting. As RSH and COMP work to find that just right product mix, there can be significant upheavals.  Consider that COMP is closing over one hundred stores. On the blog we continue to emphasize the rate of change of today’s business world, swirl if you will.  One must be monitoring change or become part of it, just ask Gateway or Packard Bell or, gulp, Dell.