Professor Elam

CEO Stock Options

Wed April 27 2011http://online.wsj.com/article/SB10001424052748703789104576273042510527896.html?mod=WSJ_hp_MIDDLETopStories

 

We are studying corporate stock options in Intermed II. Please read the above article as it explains exactly what we are studying in Chapter 19 of Spiceland. 

Right to Work

Tuesday April 26, 2011

 Most students do not even know what a right to work RTW law is, yet the New Civil War rages over just that issue. 

Take a look at the markets blog and the three maps. A Right to Work Law simply means an employee cannot be forced to join a union as a condition of employment. Now the NLRB wants Boeing to be forced to stay in Washington State, a union shop state, to build airplanes. Boeing wants to build them in RTW South Carolina. 

http://online.wsj.com/article/SB10001424052748704132204576284903351491180.html?mod=WSJ_Opinion_LEFTTopOpinion

Lamar Alexander former Governor of TN examines the NIssan experience in his state, versus the UAW Saturn experience in the same state. 

The Maps on the market blog show that the Northern states, the Union, are the union shop states and the Dem voting states. They are also losing jobs, fast, as well as population. 150 years after the Civil War began manufacturing is moving out of the North to the south. Boeing just announced it will re furbish 747 800 transports here in San Antonio. 

The New Civil War has begun. The original War began at Fort Sumter, this one, well Madison WI or Seattle WA, take your pick but the fight is on. 

SA CPA Honor Student 2011

Sunday April 24, 2011

 Smiling sisters Jessica at left and Erika right pose in the lobby of the Oak Hills Country Club for the annual Meet the Firm Day of SA CPA. Erika was named our Accounting Student of the Year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 Below Shirley Peterson Audit Manager for Ridout and Erika. 

 

We were seated at the table sponsored by Ridout Barrett CPAs. Three of our student have worked or

work there now including Jill Fogelle, John Dunne, and Will Holinsky. That's Roland Godsey at left, Tax Manager for Ridout.

At bottom left President Wendi Taber calls the meeting to order!

 

 

 

 

 

 

Reading the Wall Street Journal

Friday April 22, 2011

I have mentioned in multiple classes that one needs to read the WSJ, one needs context to provide a basis for understanding derivatives. I looked on line but for some reason do not find today's commodity column. 

It relates that a huge purchase of puts in the SLV ETF was made at a strike price of $25. The article explains this means the buyer suspects silver could fall to $25 from its over $40 lofty level now. 

Again I urge you to take a look, I will bring the article to class Monday.

The CIty that Outsourced Everything

Friday April 22, 2011

Sandy Sprngs, GA split off from Atlanta and outsourced their services. We are studying budgets and pensions. Cities that are in trouble cannot fund their pension systems. Take a look. 

Derivatives

Thursday April 21, 2011

 

I posted my derivative presentation for Intermed II on Black board. I have made the same presentation to Cost and Intermed I as well as to a local accounting group. I have enjoyed visiting with Dr. Lewis Intl Accounting Class on the same subject as well as various currency gyrations. 

MY aim is to make a two hour CPE Continuing Professional Education out of this. I am adding some brief history on how derivatives were involved and at the heart of the market meltdown in 2008. I am most interested in your feedback on how this could be improved, what should be added or subtracted. Please feel free to make a  post here or send me an e mail.

dennis.elam@tamusa.tamus.edu

 

Earnings Per Share

Thursday April 21, 2011

Here is a link to a General Electric earnings report.  Thanks to an alert student in Intermed II>.

This Forbes Report looks at the earnings reports for this week and how it supposedly affected the markets. I say supposedly because markets exhibit patterns that reflect social behavior. Earnings reports are a sort of white noise that generally confirm what is already happening.  

Budget Analysis

Wed April 20, 2011

Take a look at the interesting graphic on

Mish Global Economic Analysis

We have been discussing budgets and this is an interactive display of where the Ryan versus Obama budget proposals would take us. Oh neither gets the job done. And of course any real action is way in the future which means it won't happen. 

The Market Prices Greece

Tuesday April 19, 2011

http://globaleconomicanalysis.blogspot.com/

 

Mish points out that two year Greek debt now yields 20%. In short the market is betting the Greeks will default. The price of bonds fall when interest rates rise. The market is now betting Greece will default. So yesterday US Stocks fell, US bonds fell then rallied, and the S & P suggested it will eventually downgrade US debt. No wonder with the Federal take now at 25% of the economy. The US  Dollar rallied.

I would say the future of the Euro is in doubt why it is still up is a bit of a  mystery. The Finns voted against bailing out Europe in their choice of candidates this past weekend.  Tiny Finland you see is a well managed country, Greece is not. 

This bears watching the next few weeks, such a spike in price suggests a coming climax of sorts, bailout or default. The Greeks refuse to restructure, ie slow default. as their own state controlled pension funds of full of Greek bonds. So they would be defaulting to their own citizens. 

By the way, those going to Ireland on the trip are surely aware that Irish banks have all been downgraded to or near junk status. The saga of PIGS Portugal Ireland Greece Spain slogs on. 

How a Bill Becomes Law

Sunday April 17, 2011

I am reading Robert Scheer's The Great American Stickup. Recently I gave the lecture on the history of derivatives as well as the recent history of the financial crisis as well as famous derivative blow ups. Sheer pulls not party line punches, describing vividly how Enron et all bought an paid for stalwarts in both parties to do their bidding. As I have said this sort of background reading will allow you to understand more about derivatives, how they came to be, how de regulation of Glass Stegall by Texan Phil Gramm no less, made all this happen. Consider this e mail from one Enron lobbyist to another. The comments in parentheses are mine. 

Treasury just minutes ago sent this compromise language to the CEA Commodity Exchange Act to Gramm's staff. It is my understanding from Treasury that the swap exemption is expanded slightly to say that if you (that would be Enron) are trading on a facility MTF and you are trading on principle to principle basis (you dreamed up the trade all on your own) among eligible contract participants, you are no longer subject to anti fraud and anti maniuplation as contained in Sec 107 of the House passed legislation. This would be good for us (no kidding!)  Ken Lay is in London so we can take a quick look at the attached language and tell me if you concur. Also we need to take a look at the new Sec 4 to see if it causes any problems. They may cut a deal as early as this afternoon!

This students is an example of the best politicians money can buy

Treasury run by Robert Rubin who would later get a multi million job at Citicorp also created by such chicanery

Wendy Gramm former Commodity Futures Trading Commission Chair who moved to the Enron Board

Phil Gramm R from Texas who sponsored the CFMA Commodity Futures and Modernization Act without which we would not have banks in the gambling business

Come back, I'm not thru with the book more to follow