Professor Elam

SA CPA Society Friday Nov 7

Click here to learn more about the student event planned for Friday evening 6-8 Nov 7.

I would like as many of you as can to attend. It will be held at the SA CPA chapter headquarters

Alamo Towers West
901 NE Loop 410, Ste. 420
San Antonio, TX 78209
[email protected]

This is the twin towers building on the north side of North 410 west of nacogdoches.

The purpose is to discuss and describe what being a cpa is all about.  This is a chance to meet practicing cpas as well as fellow students at other campuses.

We missed the Student Career Nite earlier this semester, I would like for our school to make  a good showing to let the cpa community know we are here.

Yes I am planning to be there.

Dennis Elam

Taxing Times

Prof Tom sowelltakes a look at the taxing plans of Barack.  As he says this has been tried in many countries, it never works. England was just about reduced to Belgium before Lady  Thatcher took over. France and Germany are legends in their own minds, certainly not in their economic importance as unemployment in both soars past 10%.

While politicians say they will penalize companies that send jobs offshore, the reason companies do that is self interest. When the overall tax burden, including payroll taxes, becomes too high, companies stop buying employees. This is clear in the trend of outsourcing the local payroll to Addeco or Kelly Services in manufacturing firms in Austin. The next logical step is to eliminate the local workforce altogether and take your chance on the dicey legal environments of India, China, or now Viet Nam or Bangladesh. Companies conclude that most anything is better than enduring endless scrutiny and fines and taxes on everything they do, and that includes hiring employees. FICA tax on a $0 K employee is about $7500, and for what?  That buys one participation in Social Security, a scheme no state insurance commissioner would endorse.

One need look no further than Michigan to see where endless 'benefits from employers' gets the workers, the employers simply leave the state and move to Mississippi and Alabama. Michigan by the way has the worst economy in the nation, tied with Ohio, both have a net outflow of residents.  Yet Michigan and Pennsylvania and Ohio, all failed economies, may well decide this election.

Socionomics and Mood Swings

I have written about socionomics, the idea taht popular mood influences what happens in our lives. This manic depressive cycle is most prominentlty displayed in the stock market. People buy when they are happy and sell when they are unhappy.

I have been unable to post responses to your comments for some reason, a glitch in tht typepad server apaprently. Andrea M. wonders if Wall Street will ever be the same and just how do people feel that work there.

Big picture, the economy moves in cycles. Oil were

36 in 1981

12 in 1986

low 20s in the 1990s

12 in 1998-6

145 in 2008

60 bucks or so at the moment

Side comment, can you see why I do not live in the oilfield economy of Odessa, TX any more, but i digress. Hoqw edo you suppose someone feels that lives and tries to maintain a life or business when the economy is a derivative of the oil price?

Stocks were

800 in  1982, 14,000 in 2008, now 9000

Gee, same thing.  Part of my message is that one needs to examine where you are in the cycle to maintain some semblance of sanity and reason to handle the events about you. The idea of socionomics is that the mood swings of people determines what hapens, not the other way round. Stocks are donw because the mood turned negative. I have posted numerous observations that support this thesis from the kind of movies we watch to television to political candidates, ie, we want change.

As for going after the bad guys, there is too much culpability in both political parties to really do that. Republicans sponsored the Commodity Modernization Act thanks Phil Gramm that led to Credit Default Swaps. Democrats refused tighter controls over FNM and FRE after the Community Development Act that urged banks to make loans to sub prime borrowers, thanks Bill Clinton and Barney Frank.  The SEC that is supposed to ride herd on brokers and public firms as far as I can tell just shuffles paper and asked for more paper after SARBOX but never really DID anything to stop any of this. And the accountants, well they have just been along for the ride collecting fees.

As Bernie Goldberg remarked on tv the other night, indeed we are doing better in Iraq, but people are tired of the war and the problems of those folks. Like in the 1930s, focus will now turn inward, same thing by 1974 after years of the war in VIet Nam, enough people say. Is this a good think, I don't know but that is what is happening.

Interestingly, the Dow Utilities are performing the beast of the three DOW indices, I guess we will still have the lights and tv one no matter what.

Ben Stein on the Economy

Ben Stein is always worth a read, check it out.

Horror Flicks Move Center Stage

From the NY Times

"In Bad Times, Moviegoers turn to Singing and Sawing"

The second surprise at the weekend box office was the strength of an escapist film at the opposite thematic extreme: "Saw V" sold an estimated $30.5 million in tickets at North American theaters, according to the tracking firm Media by Numbers. The horror thriller, built around a serial killer named Jigsaw, sold about $6 million in tickets in limited overseas release.

Horror franchises typically crater in popularity once past their third installment. "Friday the 13th" and "Halloween" were limping considerably by their fifth sequels. But "Saw" has shown remarkable staying power, especially considering the harsh criticism the franchise has endured from advocacy groups concerned about its brand of exploitive graphic violence, or torture porn.

"It is clear that there is plenty of blood yet to give," said Tom Ortenberg, president of theatrical films for Lionsgate, the studio behind the "Saw" films.

Mr. Ortenberg noted that the franchise had surpassed the cumulative domestic box-office tally for the nine "Halloween" movies and would surpass the cumulative take for the 11 "Friday the 13th" films in the coming days. Those statistics, however, are not adjusted for inflation.

"High School Musical 3" and "Saw V" took first and second place at the weekend box office. "Max Payne," a Fox action-thriller based on the video game, was No. 3 with $7.6 million (for a new total of $29.7 million), while Disney's "Beverly Hills Chihuahua" sold $6.9 million ($78.1 million). "Pride and Glory," a Warner Brothers crime drama, opened in fifth place with $6.3 million.

Prof Elam comment

 

Manystocks are already selling for less than book value.  From a socionomic viewpoint the interest in horror and gore is not surrising, the markets are the very reflection of that sour mood.  While there are always horror movies around, the success of Saws, and its repeat success  over Disney fare speaks volumes about the mood of the public. 

Lon Chaney brought  Dracula to modern times during the 1930s. True Blood which I have mentioned here before is a smash success on HBO.  Frank Langella ramped up the sexual angle for Dracula in 1979 as the Dow sank and the US endured a second oil embargo. The story on the screen matched the mood of the public then as now.

In a different vein, screwball comedies are also a staple fare of the Depression. Cary Grant gained his fame in films such as Bringing up Baby with  Kate Hepburn. The purpose is to take the public's mind off the dreary news. This explains the success of extravagant musicals staged by Busby Berkley and the success Fred Astaire had at the time. Poor liked to watch the rich folks at play, and dream.

Clint Eastwood's latest which hits Friday, the Changeling, features a mother recovering a kidnapped child, but is it her child.  Again the tragedy and puzzlement on the screen reflects the inability of politicians, economists, and everyone else to explain what is going on.

Valuing Assets

Markets sawing from over to undervaluation. I heard some naive 'expert' tell people just last week that they could 'buy' real estate at a 15% discount to market value, a great deal.  Well what you pay is market value at the time, the question is, what will market value be in the future?  Value, or the price quoted, is always changing swinging from some imaginary under to over value.

Valero VLO has dropped from $60 to $15.96.  Fiannce yahoo quotes price to book at .45, so VLO is selling for one half its book value!   so we can buy all those refineries for half price.  Gee that sounds like a bargain to me. But apparently the markets did not think so as they continue to bid VLO down.

The bottom is marked by folks that throw the assets of perfectly good companies of the bonfire of evaporating values, only to have the shrewder come in for the bargain sale. The tough part is figuring out just where that line n the sand is drawn.

but when I see a well managed company like VLO selling for one half book, that prompts my comment earlier that we should be close to some kind of washout selling climax.  And with the anniversary of 1987 Monday crash upon us, perhaps this will prove to be at least some sort of  low ssetting up.

Again, issues of valuation are why we study accounting.

Exiting Wall Street

It is said that it takes an entire generation to have another crash. And it has been a Fibonacci 21 gnerational years since 1987. Former Wall Street employees are leaving NYC in droves. And thus it has always been. While Wall Street frims preach buy low sell high, they themselves do exactly the oppostite. Much of this selling is all by hedge funds scrambling to meet withdrawal requests, on the way down. Wall Street hired on the way up and bonused on the way up, witness the fat bonuses of Franklin Raines and John Fuld at FNM and LEH, now both gone bust a year later.  When you see entire cllasses of Ivy League firms wanting to work on Wall Street, you know a top is in the making. And waht a top it was, DOW 14,000.

It is Monday Oct 27 and the S & P is already down40 points. I suspect we will have a capitulation sell in celebratinon of the crash of 1987 21 years ago, that was a Monday also, remember?

Get Healthy!

  I have been reading Suzann's Somers latest book at left. 

While you may know Suzanne as tthe star of a popular tv show, okay back in the 1970s, she is these days an accomplished author, this is her 18th book most of them on health, nutrition, and attaining hormonal balance. Hre are a few snippets.

Doritos are 40 % chemicals

Diet sodas contain aspertame which breaks down into formaldehyde and formic acid which can break down DNA. Dramatic increases in cancer are linked to diet soda consumption.

Avoid omega 6 in corn, safflower, canola, peanut and soybean oil, use oilive oil instead

Exercise, get plenty of sleep, drink water without fluoride

Get tested to ascertain your hormone levels which start dropping when you are in your thirties

Bottom Line I see lots of students doing all the wrong things, and frankly,shuffling  around the building.  We get comments like, I just went blank on the exam, I am exhausted, I cannot remember, no wonder, fueled by diet soda and chemical laden chips, the brain does not function properly.

Physical exercise is not a required class here but perhaps it should be

Jettison all the soft drink machines, Oprah featured an elementary school prinicipal that did that in her school and improved test scores, dramatically, why don't we do that.

Eliminate junk food like chips and sugar laced candy bars. there are 9-12 teaspoons of sugar in one coke, yuck!  elevating your sugar level brings on anxiety and an inability to concentrate.

I gave up iced tea years ago, you would be surprised to notice just how much caffeine you ingest once you drop iced tea.

Here are a few ideas under Eat Great Lose Weight  Most of her site is simply about selling a book but here is the foreward to one book that contains some of the ideas she is promoting.

I am in no way connected with Suzanne nor receive anything, I am however increasingly concerned about what seems the alarming deterioration of healthy lifestyle among students. This is in fact refelctive of the dark public mood. Exercise is a bull market phenomenon, sloth is representative of  bear markets.   Just a few years ago San Antonio 'won' a national ranking as one of the two most overweight cities in America, not  good.....

Lackland Vet Hopstital

Lackland AFB has started a vet hospital for combat dogs wounded in action. By the way, there will soon be a 900,000 sf addition to Brook Army Medical Center, that will help in soaking up some of the vacant houses in town.  Nice to be reminded of all the good tah happens in San Antonio.

Lay Offs Imminent

B/W reports aht lay offs should start any time with the huge US slowdown.

Look for unemployment and then crime to rise.