Gee now the would be rich are being foreclosed.  Click there and learn about $1M + foreclosures. Seems the Wall Street boys are in trouble again, this time. I don’t know that every new wing ding idea on Wall Street goes bust, but a lot of them do. The latest idea which is not a new one at all is dumping such loans on the unsuspecting via CDOs, collateralized debt obligation.  Well, at least they are collateralized in theory, with homes that are now being repossessed.  Now what happens when home after expensive home goes on the market at foreclosure?  Prices go down, which means the value of ALL those homes collateralizing such loans is going down.  Which means that even if they weren’t they are sub prime loans now.  A bank regulator would be asking for more collateral if he could.

This is typical of such downward spirals.  I suppose if we could  line up all the real estate icebergs of which we have now seen the tip, we could have a cool summer in Dallas!

The answer is to preventing such stuff is to demand 20% down payments and realistic loan payment to monthly take home cash.  Most crashes are caused by too much debt or leverage and then when the collateral starts to give way there is nothing left.

Wed March 28 was a tough day for home builders like Lennar..  We study accounting to learn how to judge the financial well being of companies.  I have been discussing the weakness of the home building sector and the sub prime lenders. Now the stock market is down for another week after the 8% one day drop in China.  Bond yields are up, not down as many thought, why?  Do you think the US dollar will go up or down as a result? Why would the currency change or interest rates go up  as a result of what is happening to homebuilders? This is why we have a curriculum combining economics with accounting and finance.  I think and you will see me discuss in class the use of technical analysis, the use of chart patterns, to pull al this information together as the market does to try and make future predictions.

So where do you see the Dow Jones at summer end?

DLE

Chrysler is the company that barely makes it in good times and nearly goes bust in bad, here we go again.  Lee Iacocoa re made the firm then Daimler bought it and now it is for sale for a fraction of the  price that Mercedes paid for it.  Read the latest about the April 4 shareholders meeting.

This raises all sorts of questions.  How could someone as smart as Daimler have screwed this up (note my use of a popular MBA phrase here)?  We use accounting information to make business decisions. Now it appears that the price Daimler paid was way too high. Were they wrong at the time or has bad strategy since muddied the marketing waters.

Jim Rogers says this is typical of most mergers, they are bad ideas, why was this a bad idea? HInt what about culture and product lines. Does this help you understand what makes a BLUE CHIP company.  Blue chips make money year after year. They pursue a focused strategy of doing what they do best. They are well financed and well managed, typically holding on to valuable employees.  They are forward looking. Yet there are of course success even among some failures, note Ford’s success with Aston and Jag that now they may have to sell.  Gee, this is a tough business.

It is hard to stay on top, just ask K Mart, Dell, GM, the Dallas Cowboys, Britain, or Christy Todd Whitman.  How do those stories contrast with say Johnson and Johnson or DuPont or Lands End?

The US companies want Chrysler for free, the sharks are circling, will Cerebus save the day?

Should the US Govt have a policy here, after all thousands of US jobs are at stake?

Does foreign ownership of US Assets matter, gulp…..

Will Chrysler survive or is this just another Studebaker, American Motors waiting to happen?  Is it more likely that someone might keep Jeep and attempt to sell the remaining factories to foreign builders?  Will the new owner demand concessions from states where the factories are located now to keep them open? 

Stay tuned.

One of the modern classic textbooks in economics was written by Paul Samuelson, we used it in my Econ course. In this article Prof Samuelson holds forth on the Panic of 1907 and how fear of default could raise interest rates.  Good reading.

We have discussed globalization and how Western Europe is now lagging Eastern Europe in terms of growth and that Western Europe has a staggering 10% unemployment rate. Interestingly presidential elections in France only take a couple of months, why can’t we do it that way?  At any rate, here is a look at the French candidates.  Will a real change take place or will France cling to its socialist past?

Have you ever read INC magazine?  Well, here is a link for an interesting story about doing business in

the Soviet Union.  Howard Dahl has survived two ruble collapses and the move from Gorbachev to well, whatever kind of economy they have now.  Siberia, think Minnesota.  The current issue of INC is all about globalization with lots of practical how to advice.  Did you know THe Earth Is Flat is still riding high on the NY Times bestseller list?

Virtual Reality went virtually nowhere at first.  No one could figure out what to do with it.  Well, now we are at VR 2.0 and there are several ideas. Read about it in this Business Week Article. It explains how VR is reducing development costs and finding new outlets in gaming and sports technology.  I found the examples of

Here is an excerpt from a recent post by one of you.

____is the most uneducated, unprepared, and idiotic man to ever take the postion as _______. He needs to do what is right for the american people, not the american elite. This country was founded by the people and for the people…not for your personal agendas Mr. ______

I intentionally put blanks for the person actually named and same for the office though given our circumstances I suppose it is obvious who he meant. My point is this, the objective of a college education should be to develop critical thinking skills and analytic ability. By that I mean the abiltiy to unemotionally analyze and draw conclusions without preconceived bias. Tom Sowell made the very correct point the other day that this virtually never happens on talk tv or radio anymore, everyone always has a preconceived conclusion and never changes their opinion. To wit, this comment above is being made about Dems and Libs about Bush, previously virutally the SAME comment was made by Republicans and so called conservatives about Clinton, go ahead, substitute either name, and you have the ‘argument’ made by the other side at that time.

This is standard fare to what passes as polic science in Liberal Arts but I expect more from business students. Logically this is called an argumentum ad hominem, literally an argument against the man. The complaintant can only personally attack the person, there is not criticism of their programs or policy. If this were a movie actor that might have validity but certianly not for a policy maker. What is lacking is any public discourse about what the other side would do, or what should be done, or how the policty was flawed and therefore failed. Indeed such attacks are bereft of any intellectual argument at all.

AS I have mentioned in replies on the blog, actually most of the people that have recently been president came from the SAME EXACT COLLEGE no less-Yale for both Bushes, Clinton, Gore, and Ford before them. Even Carter went to the Naval Academy, ditto for Eisenhower-West Point and Kennedy was Harvard (the current Bush actually can claim Harvard and Yale). Lack of education, no worse, they all have the SAME education, no chance for many new ideas from this bunch.

As for the comment that this shold not be about personal agenda, gee why do you think these people run for office anyway, for public service! PLEASE, do you think An Inconvenient Truth is anything but a personal agenda, or the Bush ivolvement in Saudi, is that not a personal agenda. Do you think Edwards would not oppose tort reform, that is how he got rich and that would certainly be his personal agenda. Lyndon Johnson’s father went broke a couple of times, clearly Lyndon made sure that would never happen to him and left office with his own media conglomerate, another personal agenda. We could go on endlessly here but

My point is that as far as choice of rulers we are about back to the French aristocracy, remember the French finally got so exasperated that they separated Marie from her own head!Yet the two parties have so gerrymandered the entire country that we have had virtually the same choices the last six or seven elections. Dole and Bush names were on I think no less than six presidential ballots as one or the other. Now Gore and Clinton share about the same distinction. This is choice? All rich folks educated at Ivy League schools? What is lacking is any substance of policy debate. Instead we get a silly political argument lately about eight attys getting canned, don’t these people have anything to do other than attempt to make the other party look bad? Is anyone looking out for me? Where is the debate on something that matters like

our failed drug policy
our failed war on poverty
our failed school system, why don’t we have vouchers
our failed border policy
our disastrously complex income tax law that wastes time and money and gains no one anything for all the time spent on it
our ever growing federal govt-a dpt of commerce that does not make anything, a dept of education that does not educate, a dept of agriculture that does not grow anything and is bigger than ever for a smaller than ever ag sector, a dept of transportation that does not transport anyone, geez…who needs this stuff…
Here is an idea, after the disasters of Katrina and Walter Reed, why not contract these services to private agencies that do a better job anyway? Wal Mart responded faster to Katrina that the FEDS, any hospital is probably better than the VA, who ever heard a great VA story? IF we can contract out prisons (CCA), why not the FED GOVT?

no policy debate, no critical thinking,l each party spending more than the other each time they get in charge, geez, would you buy stock if the FED Govt was a public company?

DLE

Okay so I write a lot about cars.  Did you know the new marketing VP for Jag North America is named Marti?  Check out this gal’s comments who has just moved from Volvo to Jag, her complaint, when she goes for an errand in her Jag, she has to dress for the occasion, seems everyone wants to talk about her car!   

Sounds like a dream job to me, well except for having to do the makeup and pantyhose thing to drive the XF…..Check it out at Marti.  Do you like the Gorgeous campaign? What have we learned about product life cycles, re inventing brands, and identifying with the customer as well as luxury placement that reflects in this article? Hey  is this managerial accounting or marketing, who cares if you get to be the Marketing VP for Jag?

The photo is the new XK that is so popular it is back ordered.  The XF she mentions is available only if you are the Marketing VP, but click here for the show version of the XF.

I have received a substantial quantity of review books for he Certified Internal Auditor and Certified Managerial Accounting Exams. This material is from the Gleim organization, I am not compensated in any way by them.  I used Gleim when I took the CPA exam in 1975. In my opinion they are still the best and in fact the Dallas CPA Society is using their materials for the CPA review offered this year.

Gleim offer an overview of each exam and how to prepare for it.  I have placed those books in the library where you may take them with you or I have plenty in my office. IN addition there are a couple of the actual review books for the exam there.  Whether you are considering taking the exams or not, you would be well advised to read at least one of the books, each is similar in terms of advice on test preparation.

Here at UNT Dallas, Laura Smith and Greta Davis at Student Development  offer valuable advice on how to study, etc.  Gleim does this also, you will quickly see that he has an exhaustive approach that leaves nothing to chance, right down to a study schedule and an advisor to help you.

These exams require a bachelor’s degree, not 150 college hours like the CPA exam. They are also much cheaper to take.   About certifications I have one bit of advice, they are like the American Express Card, don’t leave here without it.  Explaining all the requirements is beyond this post, read the well written Gleim books instead.  But these exams are certainly achievable for a good student  who graduates in Accounting or Finance.  I urge you to dedicate yourself to achieving a professional CIA or CMA, you will never regret it and it will be a lifelong achievement of which you can be proud. This is a great way to stand out from the crowd that does not have such a cert on their resume!

www.gleim.com

www.theiia.org

www.imanet.org

In a story that is getting more notice, the CEO of Starbucks in a memo, observes that Starbucks is losing its focus, or perhaps, soul.  In this Forbes posting, a consultant discusses the importance of what a being about your brand.

I see a current ad asks whether you want a car, or a Porsche?  Now that says it all about a product.  This relates back to the TQM experience that Deming describes concerning customer satisfaction. Now a Consumer Reports survey has MCD coffee as better, and cheaper, yikes, than Starbucks.  Rolex, Chanel, Armani, no dilution there.  Indeed, TCU has made the decision to limit its size to about 7500 students.  At last report, Rice was not holding classes in its football stadium.

I believe the universities are guilty ofthe same thing.  Now universities routinely promsie that graduates will make more money than foks that do not have a degree. Well, we just interviewed several ‘counselors’ with masters degrees no less that are making less than $35K per year, so much for that argument. Rather, universities have full bore operations to allow anyone to get all the loans they can for, not necessarily the college experience but certainly the quest for the college degree. One Monster.com survey revealed that 67% of university students really have no idea why they are in a university. Classes are big, and getting bigger most places, if in fact they meet at all (is on line learning really the wave of the future or are we just diluting the Starbucks experience, if you get my drift).

The article makes the point that Starbucks started as a coffee shop but has ended as a ubiquitous commodity, it’s everywhere for everyone.  Whether one has the Starbucks experience in a Target Store is indeed pretty far stretch  from the original Italian Expresso House.  The aroma of fresh ground beans wafing round a comfortable shop of folks dawdling over their lattes amid comfortable chairs, curled up with a book, and no particular place to go, that’s what it’s all about.  Is my analogy too far fetched here?  My concept of a university is about like that coffee house experience.  A comfortable place to visit and explore, find your focus and make new friends. 

What say you, are universities delivering the experience, or are we just a re labeled Maxwell House generic in Department store atmosphere?