Ridout Barrett CPAs Tony Ridout has visited and addressed our students many times. We have placed graduates with Ridout for several years.
Financial Consulting Firms
Aventine Hill Partners, Inc. Beth Hair CEO founded Aventine in San Antonio in 2009. The firm now has offices in Dallas, Austin, San Antonio, and Houston. She formerly was with RGP.
Resource Global Professionals Susan Hough has been to campus and spoken to our students. She is the San Antonio Manager of RGP. RGP and Aventine are not CPA firms. Instead they offer contract specialists for firms needing specific tasks such as compliance or Controllerships.
Acounting Today This is an independent site for accounting news regarding firms and current issues.
Certified Information Systems Auditor CISA Now that everything is literally on the computer and cyber security becomes a prominent issue, I see more and more accounting professionals with this designation. Previously known as the Information Systems and Audit Control Association, it now goes by the acronym ISACA.
Institute for the Study of War The Institute for the Study of War advances an informed understanding of military affairs through reliable research, trusted analysis, and innovative education. We are committed to improving the nation’s ability to execute military operations and respond to emerging threats in order to achieve U.S. strategic objectives. ISW is a non-partisan, non-profit, public policy research organization.
Stratfor This Austin, TX based site was begun by an ex Texas State Professor.
It is difficult to stop a bad idea cloaked in good intentions.
The President is treating our neighbor like Obama treated Israel.
The Wall Street Journal WSJ on Mexico
A US –United Kingdom trade deal may never be easier to strike than right now.
The WSJ again, but why penalize Mexican made Fords and not British made Jaguars and Range Rovers?
Trump has some good ideas in approving the Keystone Pipeline construction and re starting the Dakota Pipeline. But his ideas on Mexican trade are the failed ideas which have been tried before. Mexican President Nieto cancelled a planned Washington DC trip on trade after a bitter Twitter exchange with Trump. Yet Trump meets with British Prime Minister Theresa May today to negotiate a trade deal! Or as P J O’Rourke titles his new book, What the H___ is going on Here?
Trump, well make that President Trump, complains that the US has a $60 Billion trade deficit with Mexico. This means we buy more from them than Mexico buys from us. Well, yes, and perhaps Trump should dust off those Wharton School of Business lectures;he sure likes to brag about the degree. But where is the learning?
If two nations produce very different kinds of goods, there is a reasonable chance for balanced trade. Consider say Japan and Chile. Chile produces vegetable and fruit which cannot be grown in Japan. Japan produces economical light trucks which are useful in a developing country like Chile. So the two trade with one another on a somewhat equal basis.
Mexico produces vehicles for a variety of companies, notably Nissan and VW but now Ford and GM as well. As those cars can be assembled for less cost in Mexico than in Michigan, production gravitates to its lower cost provider. So of course we have a trade deficit with Mexico!
Elsewhere in today’s WSJ, some bone headed economists suggest NAFTA has not had that much impact on the US Economy. Obviously these guys have not visited Laredo, one of the biggest trade ports in the US now, or tried to navigate I-35 between Laredo and DFW.
Trump now threatens (promises?) a 20% import tax on goods made in Mexico to finance his Wall on the Border. This idea has been tried before, with disastrous results. And interestingly it surfaced at about the same time in the markets.
The Smoot-Hawley Tariff Act of 1930 was signed into law June 17, 1930. The tariffs (import duties on foreign goods) were the highest in 100 years. Trading partners retaliated slowing trade, and job growth, both places. Exports and imports were cut by half, lengthening the Depression. The idea then was to ‘protect’ famers as land had been freed up from grazing livestock as America embraced the automobile.
Now consider the timing of the planning. During his 1928 campaign, Hoover promised to ‘help’ farmers by raising import duties on agriculture products. The thinking was that this sort of trade protectionism would lower imports and raise the market for US agriculture products.
The House passed a version of the bill on May 1, 1929. Smoot and Hawley by the way were both Republicans as was Hoover. The Senate bill passed in March 1930, 44 to 42. My point is that the House version passed six months before the market crashed. No doubt in a misguided attempt to help, the Senate passed its bill just as the markets had risen 50% and began its historic dive to Dow 41. My point is that this same bad idea is being floated just at the US DJIA has hit 20,00, a new record now as then in the markets. This is a remarkable similarity, decades apart.
All of this really began back in the 1970. Japan became the leader in motorcycles and then small cars using motorcycle engine technology. Instead of meeting the competition (such as making AM FM radios standard equipment in US cars) the automakers fought with tariffs then as well. It did not work.
The fact of the matter is that modern production techniques are such that is it just not economical to pay someone $25 an hour to assemble a washing machine or air conditioner. Those workers need more sophisticated jobs. And so Mexico moves to where the US was after WW II with a growing manufacturing economy. Worker wages in Mexico have grown in some cases 8x in the twenty years since NAFTA passed. In the 1980s Monterey was a sleepy town, to day you can go to the opera there.
The far better idea would be a powerful NAFTA from Vera Cruz to Montreal. That would create a North America which was finally energy independent from the precarious Middle East. And trade would flourish.
Sorry, but Mr. Trump cannot dictate growth by fiat any more than Hugo Chavez could in Venezuela.
We have made numerous posts on the decline of Sears SHLD. Here is the latest run down.
Apparently the firm needs another $1.5 billion in 2017 to stay afloat. The article describes a CEO who is never at headquarters and rants and raves during meetings, sounds like the true bunker mentality.
This is ironic in that Sears literally invented catalog shopping in the 1890s. Now retail is suffering from on line shopping. Is on line shopping really very different from catalog shopping. Substitute the internet for the post office or Fed Ex for USPS and the difference disappears. It is simply that Amazon perfected it while SHLD stood still.
Another article today reports on the decline in mall occupancy. With major retailers cutting jobs and space and SHLD on the way out, no wonder.
The article details a Chinese soldier with a UN Force in Africa. His vehicle was hit with an RPG and he died two hours later.
Ironically it may have been a Chinese made weapon, the result of the China export policy.
Years ago I had my cost managerial classes a Jim Rogers book Adventure Capitalist. In either that book or the earlier Investment Biker, he observed that China was not likely
to start a war. His reasoning was the the one child policy meant that if a family lost their only child, it was wiped out, there would be no future generations. The reality of that is now hitting China, The soldier who died was a one child offspring who had already lost his Father.
I have seen a couple of movies where the heroes were being chased. The heroes were on a wood burning train or a ship with a fired boiler. Out of fuel, in each instance they began
tearing up the wood in the train or the boat to fuel the boiler. So it was a question would they consume their vehicle before reaching safety?
That seems to be the case for Sears Holdings. Now former whiz kid Eddie Lampert wants to sell Craftsman, Kenmore, and Diehard. I suppose Sears would still sell those brands as well. But gee what's left here?
Sears invented catalog shopping in the 1890s. Today that is online retailing, not much difference really. But it is just a matter of time until Lampert puts the real estate up for sale and Sears Holdings goes the way of Woolworth.
This link is provided to emphasize the point we have been making in this space the last few months; new readers take note. The price of oil does not move on supply and demand. The price of oil moves on waves of social mood. Social mood is patterned on a robust fractal demonstrated by the Elliott Wave principle. That is high sounding technical talk better explained in my web log themarketperspective than via a general interest newspaper column.
But, our point is that oil bottomed along with the stock market on February 11. The news, then as now, was uniformly negative about bullish prospects for oil prices. New York analysts were eyeing $20. The storage tanks in Cushing, OK were full. Tankers were waiting offshore literally around the world to off load more oil than any buyer wanted. Worse shale producers with too much debt had no alternative but to produce more oil to make interest payments. Ditto for OPEC and other oil producers like Russia who had nothing else to sell. And so the outlook was uniformly bleak.
Amidst that chaos, we predicted a low and then an advance in price. And so oil has risen from just under $27 to near $44 just yesterday. Share prices of everything energy have also risen though are still quite depressed from the lofty levels of eighteen months back.
Energy and stock prices have fallen early this year and then risen in tandem. We are near the seasonal peak for stock prices at Tax Day. This bears watching. Stock prices have enjoyed a furious rally of 15% since February. But stock prices generally have not exceeded last year’s highs. That would be necessary for a real across the board break out.
Meanwhile, the climate change crowd is not giving up. Its latest target is big oil and the biggest of them all-Exxon Mobil XOM. The tactics remind me of the TET offensive created by a North Viet Nam General who had studied in the USA. He reasoned that if the North created such furious attacks on US positions in Viet Nam, the resulting publicity, whether the North was successful or not, would weaken US support for the war. That would eventually spread to Congress and a lack of funding for the War. And once TET launched in 1968, that is exactly what happened. Most Americans were not aware that the North lost the offensive, only that mass casualties were happening in what appeared to be an out of control situation.
Multiple legal salvos have been launched in what is obviously a coordinated campaign to discredit XOM. This has an antecedent. It is the same tactic used against big tobacco. The government eventually proved that big tobacco had withheld information that smoking was in fact injurious to one’s health. In the same way, the object here is to fish long enough to find some evidence of climate change cover-up. This is a brilliant tactic in that the prosecutors never have to prove the danger of climate change, merely that there was a cover-up. The same tactic discredited Nixon during Watergate.
Unable to pass a carbon tax, the group now coordinates on Big Oil ( and you our readers) via the courts. How else could it be that the Attorney General of the US Virgin Islands (now honestly did you know the Islands even had an Attorney General?) and New York State both subpoenaed the same company over the same issue? The conspiracy thickens. Kenny Bruno and Bill McKibben, founder of 350.org, led the fight to defeat the Keystone XL pipeline. They are urging state attorney generals to establish in the public’s mind that Exxon is “a corrupt institution that has pushed humanity toward climate chaos and grave harm” in an explicit statement issued by the group.
I suggest that West Texas residents familiarize themselves with the 350.org website. The avowed purpose on the site is to “revoke the social license of the fossil fuel industry and keep carbon in the ground.” In other words put the entire oil industry out of business. There is of course no way existing wind and solar (now at a distinct price disadvantage to conventional oil) can provide the energy necessary to power America but hey, phrases like renewable energy sounds great!
The Racketeer Influenced and Corrupt Organization Act RICO was created to stop money laundering and such by drug cartels and organized crime. Now Sharon Eubanks who led the tobacco litigation believes XOM can be pursued under RICO.
Readers take notice, your employment is in the cross hairs of the climate change lobby.
The mission of Environmental Protection Agency (EPA) is to protect human health and the environment. The EPA came into existence during the 1970s under the Nixon administration. It seems there is an impression that only Democrats care about the environment. It may surprise some that Richard Nixon, the 37th President, was a Republican.
To put things in perspective, the early 1970s was a time when there was a lack of respect to the environment by big and small factories alike. They polluted the air and water with impunity in many cases. Setting minimum standards and doing the right thing is usually viewed by most, as an important function of government. Democrats and Republicans alike support the protection of human health from toxic chemicals and the environment from contaminated air and water. The question that companies in the USA are now trying to cope with, is how much protection is too much?
We truly live in a global interactive world. With the advent of the internet, many jobs that required a physical presence at a particular company can now be performed anywhere in the world. Also, offshore outsourcing in the manufacturing world can be performed in many places other than the USA. Why would a company want to offshore some or all of their production?
This question does not have a simple answer. Some of has to do with cheaper labor, though the US still leads other countries in productivity. Thus where we lack in cheap labor costs, we make up for much of it in productivity. Another reason that companies perform some of the activities overseas is due to regulatory compliance. The EPA is one of those agencies that is squarely in the middle of costly regulatory compliance.
The National Association of Manufacturers (NAM), reports the macroeconomic impact of federal regulations. They produced a study that reveals the extent to which manufacturers bear a disproportionate share of the regulatory burden, and that burden is heaviest on small manufacturers because their compliance costs are often not affected by economies of scale. The analysis finds that the average manufacturer in the United States pays nearly $19,564 per employee per year on compliance
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costs. On an annualized basis, if we added up all the manufactures in the USA, the aggregate costs are about 2.028 trillion dollars! Imagine how much cheaper products would be if the manufactures did not have to spend their precious capital on regulatory compliance.
Of the EPA’s 24 air rules, the highest estimated costs are for: the Clean Air Fine Particle Implementation Rule issued in 2007; the Clean Air Interstate Rule issued in 2005; and the National Emission Standards for Hazardous Air Pollutants From Coal- and Oil-Fired Electric Utility Steam Generating Units (“Utility MACT”) issued in 2011. These rules are the costliest of all of the EPA rules. The Utility MACT rule, which is estimated to be the costliest of the EPA rules, has annualized costs of about $8.2 billion (2001) according to the White House. The White House attempts to rationalize the benefits to the public by suggesting there will be less costs because the earth will not be as warm and general population health will improve. The rationalization is illogical. Imposing such stringent regulations on US manufacturing in order to cool the planet is a senseless argument, particularly if other parts of the planet, like China, are spewing more toxic greenhouse gasses than we are saving. However, the benefit calculations are superfluous at best. According to the White House, in fine print, is a statement that claims the lack of scientific rigor in their estimates. “Many constituents of particulate matter (PM) can be linked with multiple health effects, and the evidence is not yet sufficient (emphasis added) to allow differentiation of those constituents or sources that are more closely related to specific outcomes”. U.S. Environmental Protection Agency (U.S.
EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report).
The take away from the report is that the government wants to protect you by imposing very stringent regulations on businesses and the business rarely have such “protections” inure to the benefit of the business. The protections they claim are about healthcare benefits that inure to citizens of the USA (and millions of non-citizens that are here illegally). Thus, the amount of healthcare “benefit” for the public that is calculated by the federal government is unproven and furthermore has no direct benefit to the manufacturer who is compelled to comply with such mandates. So for the manufacturer, the costs are absorbed 100% by the manufacturer or business until they get passed on to the consumer (a hidden tax every time you make a purchase of anything made in the USA).
Many Americans do not understand why companies are outsourcing large components of their operations overseas. One could argue that the general public appears to be schizophrenic. On one hand, consumers want and demand inexpensive products; on the other hand, they want items made in the USA, which for
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many products, if they were made here in the USA, the cost would be significantly more. (Think about the apple I-Phones as an example). The biggest driver to offshore outsourcing is government regulation. The pace of agencies issuing new rules and regulations has hit a record high under President Obama, whose administration’s rules have filled 468,500 pages in the Federal Register. And according to the Washington Post, over the past 2 ½ years, the Obama administration has published thousands of rules. There’s a problem, however, technically speaking, about 1,800 regulations shouldn’t be in effect, because they weren’t reported to Congress as required and thus should be considered illegal.
And the effect of all of these regulations (legal and illegal) drive companies to outsource overseas. And if anyone who has personally visited China or India, the two largest countries that are the recipients of the USA outsourcing, have observed pollution at unprecedented levels. If the EPA would back off a little bit and allow industries to catch up and allow the market to adjust, more products would be produced here in the USA and more jobs would be available to US citizens. In December of 2015, China issued a code RED regarding the air pollution which the reach of the China air pollution can be felt in California.
If the EPA would become less militant in their regulatory heavy hand, there would be less incentive for US companies to outsource. The EPA has been driving companies overseas for years. When a company outsources some of its manufacturing to China or India, they increase more pollution which effects Global Warming. China will be happy to make the product; however, the byproduct of pollution they create is 100 times worse than if that product was made here in the USA with 2001 regulations. Somehow the EPA in their effort to protect the environment is destroying the environment in India or China. The EPA seems to think the USA is somehow not impacted when China or India pollutes at increasingly higher levels. Forcing US companies to move their manufacturing overseas does not help the environment; rather it adds to global warming by other countries.
Now is the time for heavy handed regulations to end and a better business friendly environment is created. This will attract companies to come back to the USA and make products here again. If manufacturing came back to the USA, not only would it improve the impact on air and water pollution, it would create thousands of jobs.
And placing tariffs (as Trump as suggested) on companies in an effort to force them to keep their manufacturing here in the USA will be a disaster for the USA. All that will do is increase the price of all
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goods entering the US from other countries. Who has to pay for the increase of prices of the products that come to the USA? You, the consumer. It will cost you a lot more to buy a car, an I-phone, a TV, a computer, clothes, or any other kind of durable good. And after the tariff is placed, the US company will still not relocate their manufacturing to the USA, unless the EPA and other regulations are relaxed.
Thus, until the EPA and other agencies relax their regulations, US companies will be forced to have components of their manufacturing go overseas to places like China and India (as well as many other third world countries). And when the manufacturing goes to places that pollute more than the USA, the EPA is indeed complicit in contributing to global warming.
Sociologist Inexplicably Charged With Saving Venezuela’s Economy Fired After One Month
Venezuelan Sociologist Luis Salas has been fired after just one month on the job as the country’s Economy Minister.
The Venezuelan economy is currently spiraling out of control due to low oil prices. Oil exporting giants Russia and Saudi Arabia arrived at an agreement Tuesday to halt increasing in oil production on the condition that similarly large oil producers would do likewise, according to USA Today.
So far, Kuwait, Qatar and Venezuela have all agreed to the terms of the deal between Saudi Arabia and Russia. Nevertheless, oil prices continued to fall since markets are still not confident that enough has been done to stabilize global energy markets.
Venezuela has been in a fragile state since the death of President Hugo Chavez in March 2013. In February 2014, mass protests erupted which led to the incarceration of US-educated opposition leader Leopoldo Lopez.
A coalition of opposition political parties defeated the ruling Socialist party Dec. 6 and gained control of the country’s national legislature, the National Assembly. The defeat led to the first split government rule in Venezuela since Hugo Chavez came to power in 1999.
The opposition-led National Assembly denied Socialist President Nicolas Maduro the right to have extraordinary powers to dictate economic policy beyond that which is constitutionally permitted of the presidency for 60 days. After having been denied his request by the National Assembly, the Venezuelan Supreme Court ruled in favor of President Maduro on Feb. 11.
The economic situation in Venezuela is so dire that Boeing 747s are flying into the country with loads of the country’s increasingly worthless currency due to sky high inflation. The International Monetary Fund projects that inflation will reach 720 percent in 2016.
Lately, electricity has been rationed in the oil rich OPEC member country. The government has mandated that for three months time, 250 shopping centers nationwide that stores get their power off the grid from 1 to 3pm and 7 to 9pm according to Agence France-Presse. The DCNF reported that on Feb. 7, Venezuela actually had to import oil from the U.S. in spite of being a leading OPEC member.