Professor Elam

First HPQ, now Dell?

Tuesday July 31 2012

Now credit default swaps   are rising for a host of tech stocks from HPQ to Dell to , well read this.

 

We will be studying derivatives and their implications this fall.

Tom Frost on Too Big to Fail

Monday July 30, 2012

Tom Frost, CEO Emeritus of Frost Bank writes on Too Big to Fail TBTF banks.

Tom's Uncle Joe was right, take care of the deposits and the returns come. 

Governor Raskin Speaks Out

Monday July 30 2012

Fed Governor Raskin spoke out demanding a definition of the Volcker Rule. The problem is that now banks are taking outsized bets, as they were in 2007, pocketing the gains when they win but expecting a bailout when they lose. And they are doing it with your and my FDIC deposits. 

Maria Bartiromo gets completely exasperated with Barney Frank's inability to explain the volcker rule or why the rules are still not in place.

Mars Rover Landing - August 5 Six Days and Counting

Monday July 30, 2012

Here is a simulation of what will happen if the Mars Land August 5 on you tube.  Imagine the difficulty of pinpointing a landing 56 million kilometers from here. 

Other information is here.

A good Bond Site

Friday July 27 2012

Learn Bonds is a site that will help accounting students understand the ins and outs of the bond market. 

As the author says buying a bond is not like buying a stock. The site lists differen t kinds of bonds and explains the duration and risk. Take A look.

Radio Shack - Only a Couple of Bucks to Go

Wednesday July 25, 2012

Radio Shack was the worst performing stock today. RSH tumbled to 2.60. This would be a good company to look at, along with Kodak EK, about a thirty year decline. 

RSH used to sell stereo gear, a staple of college life. I grant that music has moved to the digital format but I don't think there is a single amp or est of speakers in their store now. Making a phone store out of a Shack was a mistake, ATT, Verizone already have those. 

As the analyst says there is no unique go to feature and Best Buy has more and better gear. 

Circuit City and many other electronic retailers have folded, and with amazon on line and gas at 3.50, the competition gets fierce. 

ABA Fines Law School $250,000 for Cooking the Books!

Wednesday July 25, 2012

The University of Illinois College of Law has been censured adn fined for intentionally publishing false invomrtaino to amke its student body look more academically accomplished than it was. 

We have consistently reported the incidents reflecting that the wheels are literally coming off the Law School Bandwagon. This is really the same sort of thing as 'earnings management' at corporations, nudging numbers to make the number analysts expect. We recently noted that even as the Whale loss at JP Morgan ballooned from $2 B to $5B, JPM still made their quarterly earnings expectation, imagine that. 

Law schools are just now having to report whether grads actually get lawyer jobs or just some job. 

This is another puzzle piece to the coming College Debt Meltdown.   U of I Administrators were willing to do whatever it took  to keep the illusion of success going to continue to attract enough applicants to cover their ever escalating costs.   When money trumps ethics we have a problem.

The Impossible to Balance Budget

Tuesday July 24 2012

The US now collects 15% of GDP as Federal Receipts. But the USA Federal Govt spends 23% of the GDP. 

So nothing less than a 50% tax increase would solve the problem. That is not going to happen. 

An accountant presents the situation here.

Study Finds 20% of Companies Cheat on Earnings

Monday July 23 2012

Here is  a link to a recent academic study  in which 169 CFOs admitted to manipulating earnings. 

And so America's accountants become America's fiction writers. 

 

Apple's ROI

Monday July 23, 2012

We study Return on Investment in accounting. Apple gets paid for its products faster than it has to pay to make them. So Apple has lots of income and an increasing Return on Assets. 

This is a good explanation of managing a balance sheet.