Looks like we will need to know a lot more names than Honda and Ford in the near future.  Jason in the grad class spotted this article on Chinese autos.  The Beach Boys and Jan and Dean came to fame years ago rhyming lyrics with car names and manufacturers, if you don’t think that is talent how many words rhyme with carburetor?  Now rhyming with Hunang may be even tougher. This is another continuing example of globalization. Will Chrysler become a virtual car company, designed and made in China or Mexico for the American market? 

We have been studying costs in, well, cost class.  The Logan appears again at left.

Now B/W (remember Ariane mentioned this magazine to the class both last semester and this semester, no wonder it is a regular feature in this blog). And so as Audi introduces its new $100K+ supercar, the race is on to build the new low cost car. Read about it in this article on

The Race.  The boom in car sales the next ten years will be at the low end, the markets we have discussed here, China and India.  The Logan has proved to be a hit in Western Europe, though it was designed to sell in Eastern Europe.  Why, because people want to spend money on things other than cars.

How will these low costs be achieved?  I have advocated relaxing the rules on what can be licensed for the street here, let the rest of us do what govt does, drive Kaw Mules on the street, but only in urban areas.   Please read about how Tata and Chery plan to do the impossible, build the sub $3,000 car.

I went to the big kick off, grand opening, gala, high roller enclave only for the Allen Group DLG Friday. Check it out here at Dallas Logistics Hub.  This is being touted as the biggest thing for Dallas since the DFW Airport.  What do you think?  Note, we have the vacant ProLogis building south of I 20 on Houston School Road, the 535,000 sf building opposite our old location on Houston School Road, and now Allen Group is going to build a spec (read, no leases) 700,000 sf building at their hub.  Hmmmm, will this be enough vacant space?  How much is that in total?  Hmm, gee,

Senator John Cornyn proposes sunset legislation!  Cornyn wonders why no Federal Program ever ends, Reagan did too.  So he is trying to introduce sunset legislation, a sort of zero based budgeting to force Congress to examine these programs.  OF course he mentions the Texas Sunset law, but gee, has Texas ever eliminated a program?

The National Tax Foundation has calculated what each Congressional District pays to support the Federal Government.  The average is $17,000 though that is a bit misleading.  Okay, whatever you are planning on earning when you graduate, better add $17K to that for the Federal Government.

We are now at April 15, tax time.  Have you noticed that tax day is schedule as far as possible away from election day-Nov 2, six months, so hopeuflly you won’t remember just how much of your money Congress wastes?  Anyone think this will help?  After reading the previous article about how SS is now 44% of the budget, how long till meltdown on this whole thing?

Have you read Boomsday by Chris Buckley?  William Buckley’s son satirizes what is going to happen as the cost of supporting the elderly, regardless of need, rises to the breaking point in Boomsday.  As always, Robert Samuelson examines the real cost and willy nilly way Congress has handed out benefits way beyond need here.  A must read, unless of course you don’t object to supporting all the Boomers  on the golf course til I am 90 as Buckley suggetss….

We have studied balance sheet presentation of securities in Intermediate.  Here is an article about how various mortgage companies like AHM are restating earnings estimates.  I posted this article because it is a great example of how accounting ‘estimates’ can change which changes E/S (which we are studying now) which changes the stock price which can evaporate the value of options that we are studying now.

Securities which WERE rated A and Baa are now resulting in losses for the holders of those securities.  Gee, sounds like the rating agencies blew that one dosen’t it?  So it turns out that the pebble tossed in the pool generates wider and wider circles.  Now stop and think how

the flawed analysis of the rating

is reflected in the downgrade of the securities held which

results in losses since the securities are not paying off to their holders

so the earnings are lower than projected for the holders

which means the E/S is down which means

the denominator of P/E is down

which means that if the P/E is falling so will the stock price

whoops

see how all this ties together?  Cick on the chart at the start of this post to see the real world short term result reflected in the stock price.  Go to www.stockcharts.com and put the other symbols mentioned in the article in to see what is happening to their stocks. 

Globalization continues, click here to read bout the NYSE and Euro market merger.  We are studying E/S and options in Intermed II.  Exchanges facilitiate trading by providing liquid markets.  A liquid market is one which allows trading of shares easily as it matches buyers and sellers, they do not have to find one another.  Note NYSE wants to stay a premier exchange.

We ended the grad class on Saturday with a good discussion about ethics.It was prompted by Wacy Pruitt’s review of The Big Kahuna.  This led to mention of Death of a Salesman.  I quickly realized how little the class knew about classic movies in that someone said, isn’t that an old movie?  Well I have referenced the Dustin Hoffman version above but originally Lee J Cobb starred in the Broadway version of Arthur Miller’s play. It has subsequently been done for both tv and film by several actors.  Every would be marketing major should be required to see it BEFORE majoring in marketing.

All that led us to a discussion of The Smartest Guys in the Room.  And finally the class got where I had envisioned.  Turns out Jason had gotten so enthused about it the week before the found it and watched it and wanted to discuss it.  Ditto for the rest of the class.  Even though the regualr time had ended, the class stayed round for a while to discuss how in fact the smartest guys in the room were actually a bunch of crooks and charlatans, but then the ethical question is, did they know that or was there a never ending ability to rationalize their behavior to themselves?  Such is the draw of ethical discussion.

Reflecting on that, I asked myself how I might infuse the other classes in such a manner. I think part of the problem is that every one has not seen the movie being discussed or read the book and so is not drawn into the discussion. In a perfect world, we would have movie matinee with popcorn, all watch the same one, and then have the discussion.  The next best thing I can do, is to schedule you presentations and post a hyperlink so you can read about the movie or book and start forming your own opinions.I think this will also raise the bar for our presenters.

Hoping this will raise the interest level, I will be positioning everyone this Monday in the other two classes.

DLE

Harvard Professor Pankaj Ghemawat says Tom Friedman has it all wrong-the world is not flat. In fact while we may be wired, we ain’t communicating or venturing nearly as much across national boundaries as Tom suggested. He points to the trade between the US and Canada and the lack of commuication intercepts into Russia as examples.  His book will be Global Strategies in a World of Differences.

This is the prominent article in this Sunday’s DMN and frankly quite a challenge to Friedman’s long running best seller.  But it reflects what I have thought and what Jim Rogers and Business Week just said for example about India-lots of infrastructure and red tape remain.  Be sure to read this one, a fresh look at globalization.

WMT has a new look, er uniform, no wait!  Seeking to change its perceived image, WMT is issuing new blue shirts (2) and an allowance (well 15 bucks) toward buying khaki pants.  The smock look is out.  Apparently WMT has decided that going up market is a matter of perception, and the customers don’t link up market with smocks.  One prof notes that what would be common sense or obvious to anyone else, becomes ‘Orwellian’ in WMT speak. (Do you know who George Orwell was, maybe you should look that up in Wikipedia….)

At any rate, the retail wars continue.  As we have discussed here and in class, TGT and Old Navy have taken the casual clothing market, leaving Sears and WMT behind.  Will this make a difference?

And by the way, with only two new polo shirts, if the employee works five days a week, won’t those look pretty faded and washed out if they are washed twice a week after a couple of months, assuming they get washed of course…..Frankly that sounds a little on the cheap side to me to expect a brand new look among their thousands of employees.