Happy Times 20 Years Ago

Some good news happened on October 19
October 20, 2008 Update on Erika

Erika's 11th surgery was on September 29. It was to be an exploratory surgery to find out why she has such chronic leg pain. The surgeons found scar tissue from previous surgeries to such an extent that her main surgeon told me that “it looked like a bomb went off.” Because she had problems lifting her left leg afterwards, she was operated on for the 12th time on October 3. Afterwards she could move her left leg, but there are still medical complications caused by nerve damage in the 11th surgery.

On October 9 she was transferred to the Coolidge House therapy hospital in Boston where she is walking quite well. But the leg pain is as bad as ever, so the latest two surgeries have done nothing to relieve pain. In addition there are other nerve damage complications and numbness in parts of her body. We’re hopeful that these nerves will awaken, but with each passing day hope waned until October 19 when there were slight signs that these damaged nerves were awakening.

I will return her home on October 21 and tend to her recovery in every way possible. We return to her main surgeon’s office in Boston on October 28.

Another unfortunate happening is that our beloved general practitioner locally in Franconia. Dr. Virginia Jeffreyes, is moving to Vermont. It thus appears that it will be a very long winter.

Erika will be unable to board an airplane until next summer or to be alone overnight here at home. But who wants to travel anyway? It is beautiful and peaceful in these mountains during the winter.

Now I can indeed live my life much more like David Thoreau on Walden Pond --- http://en.wikipedia.org/wiki/David_Thoreau

Here’s a picture I love from Year 2000 in Munich. Recall that when she was five years old, Erika begged for food outside the U.S. Army camps in Munich. Decades later she had a conversation with the Bergermeister of Munich in a reception held for some accounting professors. Christian Ude and his Finance Minister were awed by this American woman who spoke fluent Freistaat Bayern.

Why Bob Jensen's going to vote a straight Democratic Party ticket in November 2008 --- http://www.trinity.edu/rjensen/2008Bailout.htm#PersonalNote

 

 

Tidbits on October 20, 2008
Bob Jensen

For earlier editions of Tidbits go to http://www.trinity.edu/rjensen/TidbitsDirectory.htm
For earlier editions of New Bookmarks go to http://www.trinity.edu/rjensen/bookurl.htm 

Click here to search Bob Jensen's web site if you have key words to enter --- Search Site.
For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/.


Bob Jensen's past presentations and lectures --- http://www.trinity.edu/rjensen/resume.htm#Presentations   


Bob Jensen's Threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page is at http://www.trinity.edu/rjensen/

CPA Examination --- http://en.wikipedia.org/wiki/Cpa_examination


On May 14, 2006 I retired from Trinity University after a long and wonderful career as an accounting professor in four universities. I was generously granted "Emeritus" status by the Trustees of Trinity University. My wife and I now live in a cottage in the White Mountains of New Hampshire --- http://www.trinity.edu/rjensen/NHcottage/NHcottage.htm

Bob Jensen's blogs and various threads on many topics --- http://www.trinity.edu/rjensen/threads.htm
       (Also scroll down to the table at http://www.trinity.edu/rjensen/ )

Global Incident Map --- http://www.globalincidentmap.com/home.php

Set up free conference calls at http://www.freeconference.com/
Also see http://www.yackpack.com/uc/   

U.S. Social Security Retirement Benefit Calculators --- http://www.socialsecurity.gov/estimator/
After 2017 what we would really like is a choice between our full social security benefits or 18 Euros each month --- http://www.trinity.edu/rjensen/Entitlements.htm

Free Online Tutorials in Multiple Disciplines --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials

Chronicle of Higher Education's 2008-2009 Almanac --- http://chronicle.com/free/almanac/2008/?utm_source=at&utm_medium=en
Bob Jensen's threads on higher education controversies --- http://www.trinity.edu/rjensen/HigherEdControversies.htm
Bob Jensen's threads on economic and social statistics --- http://www.trinity.edu/rjensen/Bookbob1.htm#EconStatistics

World Clock --- http://www.peterussell.com/Odds/WorldClock.php

Tips on computer and networking security --- http://www.trinity.edu/rjensen/ecommerce/000start.htm

Many useful accounting sites (scroll down) --- http://www.iasplus.com/links/links.htm

If you want to help our badly injured troops, please check out
Valour-IT: Voice-Activated Laptops for Our Injured Troops  --- http://www.valour-it.blogspot.com/




Free Online Textbooks, Videos, and Tutorials --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks
Free Tutorials in Various Disciplines --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials
Edutainment and Learning Games --- http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment
Open Sharing Courses --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI




Online Video, Slide Shows, and Audio
In the past I've provided links to various types of music and video available free on the Web. 
I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/music.htm

Please stop the "fat talk" (not humor) --- https://secure.pursuantgroup.net/pursuant4/deltadeltadelta/fall08/dddselect/flashstory.asp

National Science Foundation: Discoveries --- http://www.nsf.gov/discoveries/

The Digestive System http://www.vivo.colostate.edu/hbooks/pathphys/digestion/index.html

Creating the United States --- http://myloc.gov/exhibitions/creatingtheus/Pages/default.aspx

What if fonts could talk (video) --- http://www.collegehumor.com/video:1823766

University of Washington Libraries: Moving Image Collection --- http://content.lib.washington.edu/filmarchweb/index.html

Link Forwarded by Barry Rice
Sir Ken Robinson: Do schools kill creativity? --- http://www.ted.com/index.php/talks/ken_robinson_says_schools_kill_creativity.html

How Markets Work (British humor) --- http://www.brasschecktv.com/page/187.html

Next America --- http://nextamerica.csis.org/

Jay Leno on the Palin-Biden Debate --- http://www.deadlinehollywooddaily.com/leno-on-the-palin-biden-vp-debate/

Jay Leno on Co-Ed College --- http://www.youtube.com/watch?v=sxrg9Aw2E7s

The Banned Saturday Night Live Skit on the Bailout --- http://patdollard.com/2008/10/it-is-here-the-banned-snl-skit-cannot-hide-from-louie/


Free music downloads --- http://www.trinity.edu/rjensen/music.htm

Black Bear Walks Into Subway Restaurant (after the initial advertisement) ---
http://news.nationalgeographic.com/news/2008/10/081003-bear-video-ap.html

The Leonard Bernstein Collection --- http://memory.loc.gov/ammem/collections/bernstein/

"7 Great Sites About Music and Literature," by Mark Sullivan, PC World via The Washington Post, October 4, 2008 ---
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100203242.html?wpisrc=newsletter

Bob Jensen listens to music free online (and no commercials) --- http://www.slacker.com/ 


Photographs and Art

Beautiful Photos --- Click Here

David Fordham's blog has some great Rocky Mountain photos --- http://kd9la.blogspot.com/2008_06_01_archive.html

David Fordham's blog has some great Rocky Mountain photos --- http://kd9la.blogspot.com/2008_06_01_archive.html

SFMOMA: Frida Kahlo --- http://www.sfmoma.org/media/features/kahlo/index.html

Yawoot Image Collections --- http://yawoot.com/post/1466

World War II-Lockheed Burbank Aircraft Plant Camouflage --- http://www.militaryphotos.net/forums/showthread.php?t=124512

Drawing Babar: Early Drafts and Watercolors http://www.themorgan.org/exhibitions/exhibition.asp?id=4

World Beach Project --- http://www.vam.ac.uk/collections/textiles/lawty/world_beach/index.html


Online Books, Poems, References, and Other Literature
In the past I've provided links to various types electronic literature available free on the Web. 
I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm

Tom Selling sent me a link to an interesting book by his father (the book is now free online) --- http://grovesite.com/page.asp?o=MISelling&s=Memoirs&p=3882

Poet's Corner --- http://www.theotherpages.org/poems/

More Than Words (poetry) --- http://www.comp.nus.edu.sg/~vivy/Poetry/Poetry_Result.htm

Ruth Padel reads her poems --- http://www.ruthpadel.com/

Live Poetry Slam --- http://live-poetry-slam.group.stumbleupon.com/forum/12400/

The Woodrow Wilson Presidential Library --- http://www.woodrowwilson.org/

Library of Congress Search Site for Art, Speeches, Music, and Other Items --- http://catalog.loc.gov/

"100 Incredibly Useful and Interesting Web Sites," by Mark Sullivan, PC World via The Washington Post, October 4, 2008 ---
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100200090.html?wpisrc=newsletter

"7 Great Sites About Music and Literature," by Mark Sullivan, PC World via The Washington Post, October 4, 2008 ---
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100203242.html?wpisrc=newsletter

History of Media Technology --- http://www.cedmagic.com/history/

Free Online Textbooks, Videos, and Tutorials --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks
Free Tutorials in Various Disciplines --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials
Edutainment and Learning Games --- http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment
Open Sharing Courses --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI




Recession? What recession?
"Google Profit Jumps 26 Percent: Earnings Increase Beats Estimates, Bucks Economic Trends," by Kim Hart, The Washington Post, October 17, 2008 --- http://www.washingtonpost.com/wp-dyn/content/article/2008/10/16/AR2008101603804.html?wpisrc=newsletter
Why Bob Jensen will vote a straight Democratic Party ticket --- http://www.trinity.edu/rjensen/2008Bailout.htm#PersonalNote

On the left side, there is nothing right... And on the right side, there is nothing left.
 The December 31, 2008 Statement of Financial Position (a fancy phrase for the balance sheet) of every investment bank.
 The meanings in English are so varied for some words like "right" and "left."
 Fat Fannie and Fearless Freddie leaned too far to the left on the left end of the Congressional roof and fell into a pile of leftist Acorns.
 Now there's nothing left but millions of empty homes left behind when the owners left.

Governmental Accounting 101 Tutorial, by Dr. Seuss
Because of future property taxes, insurance costs, and upkeep costs, it's not clear to accountants if Fannie and Freddie should put their foreclosed homes on the right-side or the left-side of the balance sheet. But now that Freddie and Fannie are owned by the government, the GAO tells us that on balance sheets the left goes right and the right goes left. It's so confusing, but then in the Federal Government's balance sheet nearly everything bad is left out entirely so who cares what appears of the left versus what appears on the right. Nothing is correct in the first place -- http://www.trinity.edu/rjensen/2008bailout.htm#NationalDebt

Peter Pan, the manager of Countrywide Financial on Main Street, thought he had little to lose by selling a fraudulent mortgage to Wall Street. Foreclosures would be Wall Street’s problems and not his local bank’s problems. And he got his nice little commission on the sale of the Emma Nobody’s mortgage for $180,000 on a house worth less than $100,000 in foreclosure. And foreclosure was almost certain in Emma’s case because she only makes $12,000 waitressing at the Country Café. So what if Peter Pan fudged her income a mite in the loan application along with the fudged home appraisal value? Let Wall Street or Fat Fannie or Foolish Freddie worry about Emma after closing the pre-approved mortgage sale deal. The ultimate loss, so thinks Peter Pan, will be spread over millions of wealthy shareholders of Wall Street investment banks. Peter Pan is more concerned with his own conventional mortgage on his precious house just two blocks south of Main Street. This is what happens when risk is spread even farther than Tinkerbell can fly!
Bob Jensen's essay at http://www.trinity.edu/rjensen/2008Bailout.htm

A more palatable approach would be for the government to drive a Warren Buffett style hard bargain, in which, rather than buying anything from banks, the government would invest in them in a form, such as purchase of newly issued preferred stock, or bonds with a long maturity, that would augment the banks' capital and thus enable banks to make more loans. That would avoid conferring a windfall on the banks by overpaying them for their bad securities; no one thinks Buffett is conferring a windfall on Goldman Sachs. After the industry was back on its feet, the government could sell the bank stocks or bonds that it had acquired.
Richard Posner, "The $700+ Billion Bailout," The Becker-Posner Blog, September 28, 2008 --- http://www.becker-posner-blog.com/
Jensen Comment
This appears to be a solution the government is belatedly adopting.

Finally, the "too big to fail" approach to banks and other companies should be abandoned as new long-term financial policies are developed. Such an approach is inconsistent with a free market economy. It also has caused dubious company bailouts in the past, such as the large government loan years ago to Chrysler, a company that remained weak and should have been allowed to go into bankruptcy. All the American auto companies are now asking for handouts too since they cannot compete against Japanese, Korean, and German carmakers. They will probably get these subsidies, even though these American companies have been badly managed. A "too many to fail" principle, as in the present financial crisis, may still be necessary on hopefully rare occasions, but failure of badly run big financial and other companies is healthy and indeed necessary for the survival of a robust free enterprise competitive system.
Nobel Laureate Gary Becker, "The $700+ Billion Bailout," The Becker-Posner Blog, September 28, 2008 --- http://www.becker-posner-blog.com/

Well, at least it was diverse. Death really is the great leveler.
Carol Muller, Best of the Web from The Wall Street Journal, September 26, 2008
Jensen Comment
Ms Muller was referring to the largest bank (Washington Mutual Bank) death ever encountered by the FDIC. Prior to its death, WaMu received awards from Hispanic groups and other minorities for being one of the most diverse employers in the nation. The bank also had one of the highest acceptance rates for risky mortgage applications for low-income earners with little or no money for down payments. Now it's mutual shareholders lost their equity in this record setting bank failure. That's what happens sometimes what happens when a business firm elects to take enormous risks with its investors' money. ABC News last week ran a special that aired a video of WaMu executives having a hoopla party as they commenced to invest heavily in sub-prime loans that were making them millionaires (at the eventual expense of WaMu shareholders who lost everything).

Bankers (Men in Black) bet with their bank's capital, not their own. If the bet goes right, they get a huge bonus; if it misfires, that's the shareholders' problem. Sebastian Mallaby. Council on Foreign Relations, as quoted by Avital Louria Hahn, "Missing: How Poor Risk-Management Techniques Contributed to the Subprime Mess,"
CFO Magazine, March 2008, Page 53 --- http://www.cfo.com/article.cfm/10755469/c_10788146?f=magazine_featured

As we've documented the myriad ways that Washington encouraged the housing bubble, the media and Democrats continue to search for evidence to blame it all on "deregulation." One alleged perpetrator, the Gramm-Leach-Bliley Act, was released without charges after the record revealed that Joe Biden voted for it and Bill Clinton signed it. More to the point, investment banks were already free, prior to the 1999 law, to invest in the same assets that have wreaked such havoc today.
Editors of The Wall Street Journal, October 18, 2008 --- http://online.wsj.com/article/SB122428201410246019.html?mod=djemEditorialPage

Banks and homeowners aren't the only ones looking to Washington for help these days. The nation's automakers are bleeding red ink. Given the Big Three's outsize role in the U.S. economy, it may make sense for taxpayers to lend Detroit a helping hand, argue David Kiley and David Welch in a provocative essay. While Republicans in Washington have been expanding the role of government in financial services, microcredit pioneer Muhammad Yunus, of Bangladesh's Grameen Bank, is advocating a market-based solution to the financial crisis.
Monica Gagnier, "The Fed's Next Step," Business Week's Insider Newsletter, October 17, 2008
Jensen Comment
The latest trend is that government will bail out failing industries like banks, automobile manufacturers, and airlines. And why not? The government can spend trillions doing so without costing taxpayers a penny --- http://www.trinity.edu/rjensen/2008bailout.htm#NationalDebt

Poverty rates in the U.S. are much lower since 1960 --- http://sorrel.humboldt.edu/~economic/econ104/poverty/
And in the U.S., the poverty standard of living on average would be considered luxury in most other parts of the world.

As important as our Constitution is, there is no one accepted way of interpreting it. Indeed, for some commentators, it seems that if they like or prefer a particular policy or conduct, then it must be constitutional; while the policies that they do not prefer or like are unconstitutional. Obviously, this approach cannot be right. But, it certainly is at the center of the process of selecting judges. It goes something like this. If a judge does not think that abortion is best as a matter of policy or personal opinion, then the thought is that he or she will find it unconstitutional; while the judge who thinks it is good policy will find it constitutional. Those who think this way often seem to believe that since this is the way they themselves think, everyone must be doing the same thing. In this sense, legal realism morphs into legal cynicism. Certainly this is no way to run a railroad, not to mention interpret the Constitution. . . . Let me put it this way; there are really only two ways to interpret the Constitution -- try to discern as best we can what the framers intended or make it up. No matter how ingenious, imaginative or artfully put, unless interpretive methodologies are tied to the original intent of the framers, they have no more basis in the Constitution than the latest football scores. To be sure, even the most conscientious effort to adhere to the original intent of the framers of our Constitution is flawed, as all methodologies and human institutions are; but at least originalism has the advantage of being legitimate and, I might add, impartial.
Supreme Court Justice Clarence Thomas's Wriston Lecture to the Manhattan Institute, October 16, 2008 --- http://online.wsj.com/article/SB122445985683948619.html?mod=djemEditorialPage

Since the time of Hitler, civilization has never been so close to the brink of total catastrophe. This American election will decide whether civilization as we know it will survive. As much as economic questions are currently front and center, with blame to go all round, this is not an election primarily about corporate greed, or individuals living beyond their means, or government neglect of economic oversight. Nor is it about whether we should have gone into Iraq where, like it or not, American boots on the ground have begun to create an emerging democracy. This election is about whether there will be a nuclear holocaust. Alarmist? I sure hope so. Isn't it about time that we got to the point about the stakes in this election? How many more pundits do we have to watch talking about the minutae — a candidate's look, an accent, a stumble, a slogan? We have four weeks to talk about the thing that matters most: a nuclear-armed Iran, and which candidate will prevent it. The question that must be put point-blank to both presidential and vice-presidential candidates is: "Will you authorize the use of force in time to stop Iran from acquiring the capacity to make nuclear weapons — yes or no?" . . . I don't know why it is possible after the Holocaust, to have such widespread denial of man's capacity for evil. Nor do I understand why Ahmadinejad's virulent anti-semitism and call for the destruction of Israel are dismissed as irrelevant factoids when calculating the Iranian threat. Time has a story <http://www.time.com/time/world/article/0,8599,1847342,00.html?imw=Y> about "experts" who believe that Iran seeks an atomic bomb not because they have any interest in using it or passing it to others who will, but to deter, to ensure its security. According to Thomas Fringar, chairman of the U.S.National Intelligence Council: "Iran's biggest strategic concern is obtaining security assurances and accords," and it is the United States "which the Iranians consider a mortal threat." These "experts" have it exactly backwards. If Iran were really driven by such security concerns, these concerns could be alleviated without spending a nickel — by stopping its nuclear-weapons campaign and its funding of terrorists.
York University's Anne Bayefsky in an email sent from Israel by nragen@netvision.net.il
Also see http://littlegreenfootballs.com/article/31496_Bayefsky-_Focus_People#rss

Biden quoted as saying that Israel will have to reconcile itself to a nuclear Iran Democratic vice-presidential candidate Joe Biden was quoted Monday as telling senior Israeli officials behind closed doors that the Jewish state will have to reconcile itself to a nuclear Iran. In the unsourced report, Army Radio also quoted Biden as saying that he opposed "opening a additional military and diplomatic front."
Haaretz News Service, September 1, 2008 --- http://www.haaretz.com/hasen/spages/1017129.html

What professors truly want is constructive feedback that will make them better writers, thinkers and researchers. If, especially in our early days, we have somehow overlooked a seminal work (or a work that a reader at least believes is seminal), or have faulty logic, then, please, tell us so, but do so in an effort to make us and, therefore, the discipline, stronger.
Kevin Brown, Inside Higher Ed, October 2, 2008 --- http://www.insidehighered.com/views/2008/10/02/brown
Jensen Comment
One of the biggest dilemmas faced by journal referees is being constructive and honest at the same time.

Even as it battles charges of fraudulent voter registration practices in several states, the Association of Community Organizations for Reform Now, or Acorn, is negotiating to sever all ties with its founder, whose brother embezzled almost $1 million from the group.
Stephanie Strom, The New York Times, October 15, 2008 --- http://www.nytimes.com/2008/10/16/us/16acorn.html?_r=2&ref=us&oref=slogin&oref=slogin

Both Frank and Moses assured the Wall Street Journal in 1992 that they took pains to avoid any conflicts of interest. Critics, however, remain skeptical. "It’s absolutely a conflict," said Dan Gainor, vice president of the Business & Media Institute. "He was voting on Fannie Mae at a time when he was involved with a Fannie Mae executive. How is that not germane? "If this had been his ex-wife and he was Republican, I would bet every penny I have - or at least what’s not in the stock market - that this would be considered germane," added Gainor, a T. Boone Pickens Fellow. "But everybody wants to avoid it because he’s gay. It’s the quintessential double standard."
"Lawmaker Accused of Fannie Mae Conflict of Interest," Fox News, October 3, 2008 --- http://www.foxnews.com/story/0,2933,432501,00.html

October 4, 2008 message from AECM@LISTSERV.LOYOLA.EDU

For those of you not already aware of this, "The Snowball" by Alice Schroeder was published this week and is number two on the Amazon best seller list. It is the definitive work on Warren Buffett. Mr. Buffett devoted hundreds of hours of times for Alice to interview him. I'm only about 275 pages into the book but it is a real page turner and extremely well written. Of course, I may be a little biased as Alice worked for me at both E&Y and the FASB.

Denny Beresford

 

A more palatable approach would be for the government to drive a Warren Buffett style hard bargain, in which, rather than buying anything from banks, the government would invest in them in a form, such as purchase of newly issued preferred stock, or bonds with a long maturity, that would augment the banks' capital and thus enable banks to make more loans. That would avoid conferring a windfall on the banks by overpaying them for their bad securities; no one thinks Buffett is conferring a windfall on Goldman Sachs. After the industry was back on its feet, the government could sell the bank stocks or bonds that it had acquired.
Richard Posner, "The $700+ Billion Bailout," The Becker-Posner Blog, September 28, 2008 --- http://www.becker-posner-blog.com/

Finally, the "too big to fail" approach to banks and other companies should be abandoned as new long-term financial policies are developed. Such an approach is inconsistent with a free market economy. It also has caused dubious company bailouts in the past, such as the large government loan years ago to Chrysler, a company that remained weak and should have been allowed to go into bankruptcy. All the American auto companies are now asking for handouts too since they cannot compete against Japanese, Korean, and German carmakers. They will probably get these subsidies, even though these American companies have been badly managed. A "too many to fail" principle, as in the present financial crisis, may still be necessary on hopefully rare occasions, but failure of badly run big financial and other companies is healthy and indeed necessary for the survival of a robust free enterprise competitive system.
Nobel Laureate Gary Becker, "The $700+ Billion Bailout," The Becker-Posner Blog, September 28, 2008 --- http://www.becker-posner-blog.com/

Peter, Paul, and Barney: An Essay on 2008 U.S. Government Bailouts of Private Companies ---
http://www.trinity.edu/rjensen/2008Bailout.htm




The Accounting Hall of Fame Citation for Leonard Spacek --- http://fisher.osu.edu/acctmis/hof/spacek.html

It must be kept in mind that the statements certified are not ours but are our clients--and our clients do not care to mix explanations of accounting theory with explanations of their business nor can we pass onto our readers the responsibility for appraisal of differences in accounting theory. Those fields are for you and me to grapple with, not the public. In general, clients are not primarily interested in arguments of accounting theory at the time of preparing their reports. The companies whose accounts are certified are chiefly interested in what is said to their shareholders, and in the hard practical facts of how accounting rules affect them, their competitors and other companies. Usually they are very critical of what we call accounting principles when these called principles are unrealistic, inconsistent, or do not protect or distinguish scrupulous management from the scrupulous.
"The Need for an Accounting Court," by Leonard Spacek, The Accounting Review, 1958, Pages 368-379  --- http://www.trinity.edu/rjensen/FraudSpacek01.htm

Jensen Comment
Fifty years later I'm a strong advocate of an accounting court, but I envision a somewhat different court than than envisioned by the great Leonard Spacek in 1958. Since 1958, the failure of anti-trust enforcement has allowed business firms to merge into enormous multi-billion or even trillion dollar clients who've become powerful bullies that put extreme pressures on auditors to bend accounting and auditing principles. For example see the way executives of Fannie Mae pressured KPMG to bend the rules (an act that eventually got KPMG fired from the audit).

In my opinion the time has come where auditors and clients can take their major disputes to an Accounting Court that will use expert independent judges to resolve these disputes much like the Derivatives Implementation Group resolved technical issues for the implementation of FAS 133. The main difference, however, is that an Accounting Court should hear and resolve disputes in private confidence that allows auditors and clients to keep these disputes away from the media. The main advantage of such an Accounting Court is that it might restrain clients from bullying auditors such as became the case when Fannie Mae bullied KPMG.


The Largest Earnings Management Fraud in History and Congressional Efforts to Cover it Up

Without trying to place the blame on Democrats or Republicans, here are some of the facts that led to the eventual fining of Fannie Mae executives for accounting fraud and the firing of KPMG as the auditor on one of the largest and most lucrative audit clients in the history of KPMG. The restated earnings purportedly took upwards of a million journal entries, many of which were re-valuations of derivatives being manipulated by Fannie Mae accountants and auditors (PwC was charged with overseeing the financial statement revisions. 

 

Fannie Mae may have conducted the largest earnings management scheme in the history of accounting.
 
You can read the following at http://www.trinity.edu/rjensen/acct5341/speakers/133glosf.htm
 
. . . flexibility also gave Fannie the ability to manipulate earnings to hit -- within pennies -- target numbers for executive bonuses. Ofheo details an example from 1998, the year the Russian financial crisis sent interest rates tumbling. Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million.

Well, in its wisdom, Fannie decided to recognize only $200 million, deferring the other half. That allowed Fannie's executives -- whose bonus plan is linked to earnings-per-share -- to meet the target for maximum bonus payouts. The target EPS for maximum payout was $3.23 and Fannie reported exactly . . . $3.2309. This bull's-eye was worth $1.932 million to then-CEO James Johnson, $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick.

That same year Fannie installed software that allowed management to produce multiple scenarios under different assumptions that, according to a Fannie executive, "strengthens the earnings management that is necessary when dealing with a volatile book of business." Over the years, Fannie designed and added software that allowed it to assess the impact of recognizing income or expense on securities and loans. This practice fits with a Fannie corporate culture that the report says considered volatility "artificial" and measures of precision "spurious."

This disturbing culture was apparent in Fannie's manipulation of its derivative accounting. Fannie runs a giant derivative book in an attempt to hedge its massive exposure to interest-rate risk. Derivatives must be marked-to-market, carried on the balance sheet at fair value. The problem is that changes in fair-value can cause some nasty volatility in earnings.

So, Fannie decided to classify a huge amount of its derivatives as hedging transactions, thereby avoiding any impact on earnings. (And we mean huge: In December 2003, Fan's derivatives had a notional value of $1.04 trillion of which only a notional $43 million was not classified in hedging relationships.) This misapplication continued when Fannie closed out positions. The company did not record the fair-value changes in earnings, but only in Accumulated Other Comprehensive Income (AOCI) where losses can be amortized over a long period.

Fannie had some $12.2 billion in deferred losses in the AOCI balance at year-end 2003. If this amount must be reclassified into retained earnings, it might punish Fannie's earnings for various periods over the past three years, leaving its capital well below what is required by regulators.

In all, the Ofheo report notes, "The misapplications of GAAP are not limited occurrences, but appear to be pervasive . . . [and] raise serious doubts as to the validity of previously reported financial results, as well as adequacy of regulatory capital, management supervision and overall safety and soundness. . . ." In an agreement reached with Ofheo last week, Fannie promised to change the methods involved in both the cookie-jar and derivative accounting and to change its compensation "to avoid any inappropriate incentives."

But we don't think this goes nearly far enough for a company whose executives have for years derided anyone who raised a doubt about either its accounting or its growing risk profile. At a minimum these executives are not the sort anyone would want running the U.S. Treasury under John Kerry. With the Justice Department already starting a criminal probe, we find it hard to comprehend that the Fannie board still believes that investors can trust its management team.

Fannie Mae isn't an ordinary company and this isn't a run-of-the-mill accounting scandal. The U.S. government had no financial stake in the failure of Enron or WorldCom. But because of Fannie's implicit subsidy from the federal government, taxpayers are on the hook if its capital cushion is insufficient to absorb big losses. Private profit, public risk. That's quite a confidence game -- and it's time to call it.

 

**********************************

:"Sometimes the Wrong 'Notion':   Lender Fannie Mae Used A Too-Simple Standard For Its Complex Portfolio," by Michael MacKenzie, The Wall Street Journal, October 5, 2004, Page C3 

Lender Fannie Mae Used A Too-Simple Standard For Its Complex Portfolio

What exactly did Fannie Mae do wrong?

Much has been made of the accounting improprieties alleged by Fannie's regulator, the Office of Federal Housing Enterprise Oversight.

Some investors may even be aware the matter centers on the mortgage giant's $1 trillion "notional" portfolio of derivatives -- notional being the Wall Street way of saying that that is how much those options and other derivatives are worth on paper.

But understanding exactly what is supposed to be wrong with Fannie's handling of these instruments takes some doing. Herewith, an effort to touch on what's what -- a notion of the problems with that notional amount, if you will.

Ofheo alleges that, in order to keep its earnings steady, Fannie used the wrong accounting standards for these derivatives, classifying them under complex (to put it mildly) requirements laid out by the Financial Accounting Standards Board's rule 133, or FAS 133.

For most companies using derivatives, FAS 133 has clear advantages, helping to smooth out reported income. However, accounting experts say FAS 133 works best for companies that follow relatively simple hedging programs, whereas Fannie Mae's huge cash needs and giant portfolio requires constant fine-tuning as market rates change.

A Fannie spokesman last week declined to comment on the issue of hedge accounting for derivatives, but Fannie Mae has maintained that it uses derivatives to manage its balance sheet of debt and mortgage assets and doesn't take outright speculative positions. It also uses swaps -- derivatives that generally are agreements to exchange fixed- and floating-rate payments -- to protect its mortgage assets against large swings in rates.

Under FAS 133, if a swap is being used to hedge risk against another item on the balance sheet, special hedge accounting is applied to any gains and losses that result from the use of the swap. Within the application of this accounting there are two separate classifications: fair-value hedges and cash-flow hedges.

Fannie's fair-value hedges generally aim to get fixed-rate payments by agreeing to pay a counterparty floating interest rates, the idea being to offset the risk of homeowners refinancing their mortgages for lower rates. Any gain or loss, along with that of the asset or liability being hedged, is supposed to go straight into earnings as income. In other words, if the swap loses money but is being applied against a mortgage that has risen in value, the gain and loss cancel each other out, which actually smoothes the company's income.

Cash-flow hedges, on the other hand, generally involve Fannie entering an agreement to pay fixed rates in order to get floating-rates. The profit or loss on these hedges don't immediately flow to earnings. Instead, they go into the balance sheet under a line called accumulated other comprehensive income, or AOCI, and are allocated into earnings over time, a process known as amortization.

Ofheo claims that instead of terminating swaps and amortizing gains and losses over the life of the original asset or liability that the swap was used to hedge, Fannie Mae had been entering swap transactions that offset each other and keeping both the swaps under the hedge classifications. That was a no-go, the regulator says.

"The major risk facing Fannie is that by tainting a certain portion of the portfolio with redesignations and improper documentation, it may well lose hedge accounting for the whole derivatives portfolio," said Gerald Lucas, a bond strategist at Banc of America Securities in New York.

The bottom line is that both the FASB and the IASB must someday soon take another look at how the real world hedges portfolios rather than individual securities.  The problem is complex, but the problem has come to roost in Fannie Mae's $1 trillion in hedging contracts.  How the SEC acts may well override the FASB.  How the SEC acts may be a vindication or a damnation for Fannie Mae and Fannie's auditor KPMG who let Fannie violate the rules of IAS 133.

 

Video on the efforts of some members of Congress seeking to cover up accounting fraud at Fannie Mae ---
http://www.youtube.com/watch?v=1RZVw3no2A4




"Farrakhan Says 'New Beginning' For Nation of Islam," CBS 2 Chicago, October 17, 2008 ---
http://cbs2chicago.com/local/nation.of.islam.2.843209.html

The Nation of Islam, a secretive movement generally closed to outsiders, has planned a rare open-to-the public event at its Chicago-based headquarters in what the Minister Louis Farrakhan deemed a "new beginning" for the group.

Hundreds of religious leaders of different faiths have been invited to the event planned for Sunday, a rededication of the group's historic Mosque Maryam on the city's South Side. Farrakhan is scheduled to speak.

"We have restored Mosque Maryam completely, and we will dedicate it to the universal message of Islam, and the universal aspect of the teachings of the Honorable Elijah Muhammad," Farrakhan said in an invitation letter. "It represents for the Nation of Islam, a new beginning."

The event comes just weeks after the death of Imam W.D. Mohammed, the son of Nation founder Elijah Muhammad who broke with the group and moved thousands of African-Americans toward mainstream Islam.

The Nation purchased the mosque, a former Greek Orthodox church, in 1972 and has since been making renovations. The stately 1948 structure, embellished with a golden dome and topped with an Islamic crescent moon, is adorned with Quranic verses in Arabic.

Experts say opening the mosque's doors to the public is a calculated move.

"It is a very conscious effort to open the mosque up to the community and to rededicate the community to learning about Islam," said Aminah McCloud, a professor of Islamic studies at DePaul University. "Previously, the Nation has been open to people coming to visit it, but its members don't generally go anywhere else ... now there is a concerted effort."

While the Nation has espoused black nationalism and self-reliance since it was founded in the 1930s, in recent years members have reached out to other groups. For instance, the Nation has a Latino liaison and has become involved in immigrant rights rallies and marches. Also, the Minister Ishmael Muhammad, a top assisting minister at the mosque and widely thought to be a potential successor to Farrakhan, has talked about unity between all people, at times speaking in Spanish.

Farrakhan, 75, has haltingly tried to move the Nation toward traditional Islam, which considers the American movement heretical because of its view of Elijah Muhammad as a prophet -- among other novel teachings. Orthodox Islam teaches that there has been no prophet after Prophet Muhammad in the seventh century.

He's also played down some of the group's more controversial beliefs. The Nation of Islam has taught that whites are descended from the devil and that blacks are the chosen people of Allah.

The event on Sunday also wraps up a week of events marking the 13th anniversary of the Million Man March, which Farrakhan began in 1995. That year, hundreds of thousands of people traveled to Washington, D.C. to participate.

On Thursday, Farrakhan spoke to inmates at Cook County jail urging self improvement, atonement and reconciliation, principles the Million Man March promoted.

Those values "can help reduce violence and anti-social behavior ... and have universal significance and will benefit those willing to listen," according to a statement from the Nation.

Farrakhan's Sunday speech will mark his second major public address this year and is among several smaller community and religious events he has attended.

His public appearances have surprised many since in 2006, he seceded leadership to an executive board while recuperating from serious complications from prostate cancer.

In February, Farrakhan appeared at an annual Saviours' Day event in Chicago and called Democratic presidential candidate Barack Obama the "hope of the entire world" that the U.S. will change for the better. The Obama campaign quickly denounced Farrakhan's support, because of past comments about Jews that many have called offensive.




Gender Equity in Academe

"Do Babies Matter in Science? A true measure of gender equity in academe would look at both the career and family outcomes of female Ph.D.'s." by Mary Ann Mason, Chronicle of Higher Education, October 17, 2008 --- http://chronicle.com/jobs/news/2008/10/2008101701c.htm

Federal investigators of Title IX, the law that forbids sexual discrimination in education, have only recently discovered that there may be a problem for women in science.

Investigators for the National Science Foundation, the National Aeronautics and Space Administration, and the Department of Energy have been inspecting several campuses for potential Title IX violations in mathematics, science, and engineering departments (The Chronicle, January 20, 2006). The New York Times revisited the issue this summer and found that, "So far, these Title IX compliance reviews haven't had much visible impact on campuses beyond inspiring a few complaints from faculty members."

Evidence of the problems women face pursuing careers in academic science shouldn't be hard to find.

Look around the campus of any large research university. In most humanities and social-science disciplines, departments are blooming with female graduate students where there would have been few 30 years ago. But in math, engineering, and the physical sciences, the numbers remain embarrassingly low. In 2006, women received 28 percent of the doctorates awarded in the physical sciences, including computer science and math, and only 20 percent of those awarded in engineering. But that is great progress compared with 20 years ago when the numbers were often too small to register statistically.

The great loss is the absence of women on the faculty in those fields, because those are the women who have walked the whole walk.

Only 10 percent of faculty members in physics are women, the American Institute of Physics found in 2005, in a study that prompted the Title IX investigation. Less than half of the women who earn Ph.D's. in these challenging fields continue through to positions in academic research.

So far, as the Times article reported this summer, scientists seem to be telling Title IX investigators that the problem in academe is not so much discrimination as a lack of interest.

While proponents of women in science say there is evidence of discrimination in certain fields, the article said, "The quality of that evidence is disputed. Critics say there is far better research showing that on average, women's interest in some fields isn't the same as men's."

Some researchers quoted in the article found that "information technology workers (more often men) especially enjoyed manipulating objects and machines, whereas workers (more often women) in other occupations preferred dealing with people." Susan Pinker, in her book, The Sexual Paradox, argues that "the campaign for gender parity infantilizes women by assuming that they don't know what they want." She said her interviews with women who had abandoned successful careers in science and engineering convinced her that they chose other careers because they lost interest in science.

I would invite Title IX investigators to talk directly to graduate students and postdocs in the sciences, mathematics, and engineering to find out what discrimination looks like.

You will find women like Jennifer Mitchell, a Ph.D. in neuroscience and a postdoc at the University of California at Berkeley. When Eve Mason Ekman (my daughter) and I interviewed Mitchell for our 2007 book, Mothers on the Fast Track, Mitchell told us, "I don't think I'll ever do a tenure-track job, and people were very upfront about that when I had my child."

You'll also find women like Sherry M.J. Towers, a particle physicist and a postdoctoral fellow, who had a baby and was effectively blacklisted by her adviser (The Chronicle, November 11, 2005). When she was pregnant, she said, her adviser refused to write a letter of recommendation for her unless she returned to work almost immediately. She did return, and he still refused. She received no interviews for any of the positions to which she applied.

Discrimination against job candidates who are pregnant or have children is a very real part of gender discrimination. Some scientists may believe that women who have families cannot be serious scientists because academic science demands exclusive attention to research. But they do not hold the same beliefs about male scientists with kids. In fact, research shows that male scientists are far more likely to have children than female scientists; two years after their Ph.D.'s, nearly 50 percent of men, but only 30 percent of women, had children.

Women in science and math learn that truth early on. When I was dean of the graduate division at Berkeley, my staff members and I studied thousands of graduate students and faculty members to learn more about the effects of family formation on the careers of Ph.D.'s. Our project — "Do Babies Matter?" — traced the career tracks of academic men and women through their doctoral years to retirement. We found firm evidence that the lack of family-friendly policies turns away both men and women, but far more often the women, from careers in academic research.

That is true across all disciplines, but more notably in the physical sciences, technology, engineering, and mathematics, where the number of women is small to begin with.

Women who do pursue careers in academic science pay a high price for playing the game. Nationally, "married with children" is the academic-success formula for men, but the opposite is true for women, for whom there is a serious "baby gap." Among scientists who achieved tenure, 72 percent of the men are married with children as opposed to only 50 percent of women. Is that gender equity?

Federal investigators, when counting heads, shouldn't just consider the number of women who have succeeded in academic research. A true measure of gender equity in academe would look at both the career and family outcomes of female Ph.D.'s. We call that two-pronged measure the "baby-gap test," because it takes into account both the gap in professional outcomes for women with children compared with men and the gap in family formation for academically successful women.

Investigators need to ask not only how many women are professors and deans relative to their male counterparts, but also how many women with children are in high places compared with men with children. Viewing the situation in that way reveals that women have much further to go to achieve gender equity than we think.

Subtle maternal discrimination is difficult to deal with, but concrete measures, such as parental leave, child care, and other support at both the student and faculty levels, would go far to reduce this unnecessary loss.

Continued in article

October 27, 2008 reply from Bob Jensen

Women with doctoral degrees in accounting are just about the highest paid, if not the highest paid, professors in academe. And the good news is that virtually all doctoral programs in North America will pay them (and minorities) to earn their doctorates along the way. Major universities are now paying new accounting PhDs upwards of $180,000 per year as new assistant professors --- male and female. And both genders are doing equally in terms of tenure. I might add that in terms of undergraduate accounting degrees, about 60% of the new hires by accounting firms are women. Feminists tend to overlook accounting careers in virtually all their academic studies. I wonder why?

So if you have a female child, it’s not so devastating by gender or race if your child chooses the right discipline along the way. Other business disciplines are paying nearly as much for new assistant professors in accounting. I’m told that nurses who earn PhDs in nursing can earn almost as much. The highest paid professors, possibly even more than in accounting, are in law although the competition is much tougher landing the law professor jobs. In accounting there are over ten tenure-track job openings for every accounting professor, although the ratio is more like two to one in the major research universities. Virtually all universities with accounting programs are having to rely increasingly on adjunct faculty without doctoral degrees due to the shortages.

My advice to female and minority children who are gifted and motivated is to seek a PhD in one of the professional disciplines rather than disciplines traditionally favored by women in humanities and science doctoral programs.

 But be prepared for a surprise in an accounting doctoral program. An accounting doctorate is actually a social science (econometrics or psychometrics) or mathematics degree with a lot of accounting thrown in along the way. An accounting doctorate typically takes five full-time years of study beyond the masters degree and several years of professional experience before being admitted to a doctoral program --- http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

Also see http://www.trinity.edu/rjensen/bookbob1.htm#careers

Bob Jensen


Enron Executive Belatedly Pleads Guilty and Receives Jail Time Plus a fine of $8.7 Million

For years I've maintained an active timeline on events connected with the Enron scandal. With the final payout to shareholders and creditors, I thought this timeline came to an end. But it just seems to go on and on --- http://www.trinity.edu/rjensen/FraudEnron.htm#EnronTimeline

"Former Enron Exec Pleads Guilty," USA Today, October 15, 2008 ---
http://blogs.usatoday.com/ondeadline/2008/10/ex-enron-execut.html?loc=interstitialskip

The former chief executive of Enron Broadband Services pleaded guilty today to one felony count of wire fraud rather than risk a second jury trial.

Joseph Hirko, 52, of Portland, Ore., will serve no more than 16 months in prison and must pay $8.7 million in restitution for Enron victims. He also agreed to cooperate in other broadband prosecutions. Sentencing is set for March 3.

Hirko admitted to allowing press releases to be distributed in 2000 that said a groundbreaking operating system had been embedded in Enron's broadband network that would allow users to pay only for bandwidth they used instead of a flat monthly fee. The operating system was still being developed, however, and never materialized.

In accepting the plea deal, U.S. District Judge Vanessa Gilmore issued a stern, civics reminder to Hirko, the Houston Chronicle said.

''Mr. Hirko, let me remind you that as a convicted felon, you may not vote in the upcoming election,'' Gilmore said. ''Don't make that mistake.''

Bob Jensen's threads on the Enron scandal are at http://www.trinity.edu/rjensen/FraudEnron.htm


"NY victim uses remote logon to nab theft suspect," MIT's Technology Review, October 1, 2008 ---
http://www.technologyreview.com/wire/21456/?nlid=1390&a=f

A laptop thief got caught -- after the computer owner tracked him remotely.

Jose Caceres said he used a remote access program to log on every day and watch his computer being used, and then tipped off police, leading to the arrest of a 34-year-old male suspect.

Caceres, 27, of White Plains, said his computer was stolen in early September when he left it on top of his car while carrying things into his home.

His first efforts to figure out who stole the laptop by logging on remotely were stymied, Caceres said. "It was kind of frustrating because he was mostly using it to watch porn," he said. "I couldn't get any information on him."

But then the suspect typed in a name and address to register on a Web site, and a few hours later, police caught the suspect.

The man was charged with grand larceny, said police Lt. Eric Fischer in Wednesday editions of the Journal News.

Tech-savvy victims are increasingly supplying police with information leading to arrests, authorities said. In May, a White Plains woman whose laptop was stolen also used remote access technology to sign on, then activated the stolen computer's camera and snapped pictures of the man using it.

"This is what happens when you have victims who get involved and use the available technology to their advantage," said Fischer, commander of the White Plains police detective division.

Bob Jensen's threads on computing and networking security are at
http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection


"Students Watch Lecture Videos in Fast Forward," by Jeffrey R. Young, Chronicle of Higher Education, October 15, 2008 --- Click Here 

Some professors report that when their students are reviewing class materials, the students speed up online recordings of lectures and zip through hour-long presentations in as little as 30 minutes. Sure, their professors sound like chipmunks. But the students say they can absorb the information faster than the professors deliver it.

The latest academic to note the trend is Jan Philipp Schmidt, manager of the Free Courseware Project at the University of the Western Cape, in South Africa. “At the University of Taiwan, students watch calculus lectures between 1.6 and 2 times faster than they were recorded,” he wrote on his blog, Sharing Nicely, summing up comments he had heard at the recent Open Education Conference in Utah. Someone from a university in the Netherlands reported that students like to play videos at double speed, he wrote, “and someone from MIT said the same was true for users of MIT OpenCourseWare.”

In an interview with The Chronicle earlier this year, Al Ducharme, assistant dean of distance and distributed learning at the University of Central Florida, said that many students there speed up lecture videos so that they can watch a 50-minute lecture in about 35 minutes. “The information is coming so slowly, but students today can absorb the information much faster,” he said.

Should professors consider speeding up their acts?

 

Jensen Comment
The two basic accounting courses at Brigham Young University are nearly all taught using a highly successful variable speed video lectures.
You can read the following at http://www.trinity.edu/rjensen/000aaa/thetools.htm#BYUvideo

  • Learning Basic Financial Accounting at Brigham Young University (BYU) From Homegrown Videos
    Developer and Instructor:  Norman Nemrow [nemrow@byu.edu
    Title of Package of Eight CDs:  Introduction to Accounting:  The Language of Business
    Textbook:  I think this package can be used along with virtually any basic accounting textbook
    Pedagogy:  Students learn from video lesson modules before each class.  The video lessons display 
                      the course instructor in video as well as accompanying PowerPoint displays that are auto-
                      matically sequenced with the video.  Students have nifty options to both replay the previous
                      five minutes and to play the videos a double (2x) speed that is an outstanding option
                      for reviewing previously-learned material.
    Classes:  Classes are more inspirational than perspirational (e.g., frequent use of visiting speakers)
    Outcomes:  Purportedly students perform better vis-à-vis previous lecture pedagogy without video. 
                       See the following evaluation of learning:

     "Variable Speed Playback of Digitally Recorded Lectures: Evaluating Learner Feedback," by Joel D. Galbraith
    (joel_galbraith@byu.edu ) and Steven G. Spencer --- http://www.enounce.com/docs/BYUPaper020319.pdf 

    Basic accounting students At BYU have great success learning accounting from special videos --- http://www.accountingcds.com/index.html

    Contact Information: 
    Cameron Earl 801-836-5649 cameronearl@byu.edu
    Norm Nemrow 801-422-3029 nemrow@byu.edu 
     

    Update message on November 3, 2005

    Bob has posted our new website in an earlier post, but the new URL to our new website describing our accounting tools is www.accountingcds.com

    We have a demo of VSP (the technology that speeds up the video and audio) technology here: http://www.accountingcds.com/learn/links/vspdemo.htm 

    Cameron Earl

    BYU

    Also see David Cottrell's approach at BYU --- http://www.business.uconn.edu/users/adunbar/AAA-CPE/AAA2003Cottrell.pdf 

    Master Educators Who Deliver Exceptional Courses or Entire Programs
    But Have Little Contact With Individual Students

    Before reading this section, you should be familiar with the document at http://www.trinity.edu/rjensen/assess.htm#Teaching

    Master educators can also be outstanding researchers, although research is certainly not a requisite to being a master educator. Many master educators are administrators of exceptional accounting education programs. They're administrative duties typically leave little time for research, although they may write about education and learning. Some master educators are not even tenure track faculty.

    What I've noticed in recent years is how technology can make a huge difference. Nearly every college these days has some courses in selected disciplines because they are utilizing some type exciting technology. Today I returned from a trip to Jackson, Mississippi where I conduced a day-long CPE session on education technology for accounting educators in Mississippi (what great southern hospitality by the way). So the audience would not have to listen to me the entire day, I invited Cameron Earl from Brigham Young University to make a presentation that ran for about 90 minutes. I learned some things about top educators at BYU, which by the way is one of the most respected universities in the world. If you factor out a required religion course on the Book of Mormon, the most popular courses on the BYU campus are the two basic accounting courses. By popular I mean in terms of thousands of students who elect to take these courses even if they have no intention of majoring in business or economics where these two courses are required. Nearly all humanities and science students on campus try to sign up for these two accounting courses.

    After students take these two courses, capacity constraints restrict the numbers of successful students in these courses who are then allowed to become accounting majors at BYU. I mean I'm talking about a very, very small percentage who are allowed to become accounting students. Students admitted to the accounting program generally have over 3.7 minimum campus-wide grade averages.

    This begs the question of what makes the two basic accounting courses so exceptionally popular in such a large and prestigious university?

    • These two basic accounting courses are not sought out for easy grades. In fact they are among the hardest courses for high grades at BYU. I think that this is probably true in most business schools in the nation.
       
    • These two BYU courses are not sought out for face-to-face contact with the instructor. The courses have thousands of students each term such that most students do not see the instructor outside of class even though he's available over ten hours per week for those who seek him out. Each course only meets in live classes eight times per semester. Most of the speakers in those eight classes are outstanding visiting speakers who add a great deal to the popularity of the course. This is often one difference between a course run by a master educator versus a master teacher. A master educator often brings in top talent to inspire and educate students.
       
    • The courses undoubtedly benefit from the the shortage of accounting graduates in colleges nationwide and the exceptional career opportunities for students who want careers in accounting, taxation, law, business management, government, criminal justice, and other organizations. But these accountancy advantages exist for every college that has an accounting education program. Most all colleges do not have two basic accounting courses that are sought out by every student in the entire university. That makes BYU's two basic accounting courses truly exceptional.
       
    • Some courses in every college are popular these days because they are doing something exceptional with technology. These two BYU courses increased in popularity when a self-made young man became a multimillionaire and decided to devote his life to being a master educator in these two accountancy courses at BYU. His name is Norman Nemrow. He runs these courses full time without salary at BYU and is neither a tenure track faculty member or a noted researcher at BYU. I think he qualifies, however, as an education researcher even if he does not publish his findings in academic journals. The video disks are available to anyone in the world for a relatively small fee that goes to BYU, but BYU is not doing this for purposes of making great profits. You can read more about how to get the course disks at the following links:

       
      Basic accounting students At BYU have great success learning accounting from special videos --- http://www.accountingcds.com/index.html 

      Contact Information:  Cameron Earl 801-836-5649 cameronearl@byu.edu 

      Norm Nemrow 801-422-3029 nemrow@byu.edu  

      Also see David Cottrell's approach at BYU --- http://www.business.uconn.edu/users/adunbar/AAA-CPE/AAA2003Cottrell.pdf  


       

    • The students in these two courses learn the technical aspects of from variable-speed video disks that were produced by Norman and a team of video and learning experts. Cameron Earl is a recent graduate of BYU who is part of the technical team that delivers these two courses on video. Formal studies of Nemrow's video courses indicate that students generally prefer to learn from the video relative to live lectures. The course has computer labs run by teaching assistants who can give live tutorials to individual students, but most students who have the video disks for their own computers do not seek out the labs.

    Trivia Question
    At BYU most students on campus elect to take Norman Nemrow's two basic accounting courses. In the distant past, what exceptional accounting professor managed to get his basic accounting courses required at a renowned university while he was teaching these courses?

    Trivia Answer
    Bill Paton is one of the all-time great accounting professors in history. His home campus was the University of Michigan, and for a period of time virtually all students at his university had to take basic accounting (or at least so I was told by several of Paton's former doctoral students). Bill Paton was one of the first to be inducted into the Accounting Hall of Fame.

    As an aside, I might mention that I favor requiring two basic accounting courses for every student admitted to a college or university, including colleges who do not even have business education programs.

    But the "required accounting courses" would not, in my viewpoint, be a traditional basic accounting courses. About two thirds or more of these courses should be devoted to personal finance, investing, business law, tax planning. The remainder of the courses should touch on accounting basics for keeping score of business firms and budgeting for every organization in society.

    At the moment, the majority of college graduates do not have a clue about the time value of money and the basics of finance and accounting that they will face the rest of their lives.

     

    There are other ways of being "mastery educators" without being master teachers in a traditional sense. Three professors of accounting at the University of Virginia developed and taught a year-long intermediate accounting case where students virtually had to teach themselves in a manner that they found painful and frustrating. But there are metacognitive reasons where the end result made this year-long active learning task one of the most meaningful and memorable experiences in their entire education --- http://www.trinity.edu/rjensen/265wp.htm
    They often painfully grumbled with such comments as "everything I'm learned in this course I'm having to learn by myself."

    You can read about mastery learning and all its frustrations at http://www.trinity.edu/rjensen/assess.htm#Teaching 

     


    Faculty Salary Data

    October 19, 2008 reply from Frimette Kass-Shraibman [Frimette@BROOKLYN.CUNY.EDU]

    I'm working on a research project about salaries of accounting faulty in the State University of New York (SUNY) and City University of New York (CUNY) systems. I want to compare the data I have collected to national surveys. The only information I was able to find is on the AACSB website and they want $149. Does anyone know of any survey information available without fees?

    Thank you for your help.

    Frimette Kass, CPA, Ph.D.
    Ass't Professor of Accounting Brooklyn College - CUNY
    Dept. of Economics
    Brooklyn, NY 11210
    718-951-5000 x1533

    October 19, 2008 reply from Bob Jensen

    Hi Frimette,

    The AACSB database is probably your best bet on salaries. The Department of Education and Labor databases are so broadly based that I’ve found them more misleading than helpful since questionable low-paying programs distort the outcomes. In an analogous fashion, accountant compensation salaries in general get driven down by including a lot of clerks in the database. Other sources of data include the AAUP and the Chronicle of Higher Education Almanac. Neither of the latter two databases can be accessed free.

    There is a somewhat interesting, albeit dated (2004 data), study of University of Tennessee academic salaries by discipline at http://web.utk.edu/~senate/docs/2005-06/UTK2004vsSUG.pdf
    University of Tennessee salaries are being compared to benchmark medians of the Southern University Group of universities.
    The most interesting thing to me in this database is how poorly accounting professors rank relative to assistant accounting professors.

    Assistant accounting professors are second from the top among the disciplines (the only higher paying discipline is microbiology).

    Accounting Professors are below the benchmark median at Rank 24.

    To me this illustrates the high degree of salary compression in accounting where it’s virtually impossible to compete for new accounting PhD graduates without paying them more than most or all full professors of accounting are making in your institution. This is primarily caused by the dire shortage of new PhD graduates in accounting. Since 2004 the situation has only grown worse ---
    http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms 

    As we move toward more and more hiring of accounting instructors who do not have doctorates in accounting (e.g. lawyers, economists, and practitioner CPAs), it becomes more difficult to compare salaries in accounting education programs.

    Bob Jensen

     


    Technology Product Price Comparison Sites

    "Tech Tactics for Hard Times," by Rob Pegararo, The Washington Post, October 2, 2008 --- Click Here

    Inconveniently enough, though, the stuff of a technological lifestyle -- the hardware, the software, the services -- can add up to a large fraction of your budget. And a lot of these items do count as essential by many people's reckoning. So how can you chip away at that figure?

    The obvious answer is to do nothing: That is, don't buy new things. Stick with last year's camera, the computer of 2005 and the printer of 2003. This option isn't always viable, however. Gadgets break, and technological progress can make using an older but still functional model seem painful.

    When that time comes, you can still shop defensively. Employ price-comparison sites, like PriceGrabber ( http://pricegrabber.com ), Yahoo ( http://shopping.yahoo.com ) and Microsoft's Live Search Cashback ( http://search.live.com/cashback ), to locate the cheapest deal. Resist the temptation of this year's alleged must-have feature -- say, 10 megapixels of resolution on a digital camera or 4 gigabytes of memory on a laptop -- to buy whatever people were excited about a year ago and which now costs less.

    Buying used hardware can also slash costs, though some devices, such as laptops, tend to age poorly.

    And, of course, decline "upsells" like fancy cables or extended warranties. (Instead, if you can, buy with a credit card that extends the manufacturer's coverage for free.)

    Software provides another way to trim the tech budget. Investigate free and open-source alternatives to commercial programs. For example, try OpenOffice ( http://openoffice.org ) before you drop $150 or more on Microsoft Office.

    But your greatest savings by an overwhelming margin are not in one-time hardware or software purchases, but in the subscriptions that make up most of the operating costs.

    With cellphone, land-line, TV and Internet services, you can easily hit $175 a month, the equivalent of two laptops a year.

    Continued in article

    Jensen Comment
    Although the above sites are probably legitimate, watch for sites found by Web searches. It is somewhat common for a site (or a TV advertisement) to claim to make price comparisons across vendors when in fact there is some type of hidden agenda such as kickbacks from a particular vendor or even some type of partnering arrangement that makes the price comparisons suspect. For example, competitor prices might be a "suggested retail prices" which are far different than the cash and carry prices. I am always suspicious of an auto insurance firm that advertises "comparison prices" all the time in television advertisements. It doesn't seem likely that a competitor that often has the lowest prices will be treated fairly in such price comparisons.

    Also be somewhat suspicious of the many software comparison sites, although many such sites are very informative and helpful.

    Bob Jensen's threads on alternatives to MS Office are at http://www.trinity.edu/rjensen/Bookbob4.htm#Pricing

    Bob Jensen's technology bookmarks are at http://www.trinity.edu/rjensen/Bookbob4.htm


    Question
    Will your college give you an IOU instead of a paycheck this month?

    "Wachovia Bank Freeze Leaves Hundreds of Colleges Cut Off From Short-Term Funds (for salaries and other ), Chronicle of Higher Education, by Kelly Field, October 1, 2008 --- http://chronicle.com/daily/2008/10/4825n.htm?utm_source=at&utm_medium=en

    Wachovia bank has frozen the accounts of nearly 1,000 colleges, leaving institutions unable to access billions of dollars they depend on for salaries, campus construction, and debt payments.

    The freeze, which affects most institutions that invest their endowment income and other assets through Commonfund, has some colleges worried that they won’t be able to make payroll this period, said Verne O. Sedlacek, president and chief executive of Commonfund, which manages investments for nonprofit institutions. Many colleges use the organization's short-term investment fund for operating expenses, “almost as a checking account,” he said.

    As of last Friday, the Common Fund for Short Term Investments managed approximately $9.3-billion in assets for 900 colleges and roughly 100 private schools.

    Wachovia, which agreed to sell its banking operations to Citigroup this week, announced on Monday that it was resigning as trustee of the fund and would allow plan participants to withdraw only 10 percent of their assets—the value of the securities that had reached maturity. That percentage grew to 26 percent on Tuesday as additional securities reached maturity, and is expected to reach 57 percent by the end of this year and 74 percent by the end of 2009.

    But unless the credit markets thaw, enabling a new trustee to sell more of the short-term securities in the fund, colleges won’t be able to access all their money until at least 2010.

    Conveying Bad News

    Yesterday, representatives of Commonfund held a two-hour conference call with rattled college investors. John S. Griswold, Jr., executive director of the Commonfund Institute, Commonfund's research arm, said the organization empathized with the colleges but had no control over Wachovia's decision.

    “Obviously, it couldn’t come at a worse time, at the end of the month and the end of the quarter,” he said in an interview. “So we can understand why people are upset.”

    The freeze could have the biggest effect on smaller institutions like Bethany College, in Kansas, which has $700,000 invested in the fund. President Edward F. Leonard III said his institution has enough money to cover costs for now because students just paid tuition, but he’s worried about the second semester, when the college typically dips into its short-term funds to pay for a variety of operating expenses.

    “All colleges ride a cash roller coaster,” he said. “But the smaller colleges, like Bethany, we feel those bumps more than others do.”

    On Tuesday, Mr. Leonard wrote to his congressman, Rep. Jerry Moran, a Republican, to urge him to support federal legislation intended to rescue the financial sector. Mr. Moran voted against the $700-billion bailout bill, which had been backed by the Bush administration, on Monday.

    “I just e-mailed his legislative assistant saying, ‘Hey, its starting to hit home,’” he said. “If you think this is something confined to New York City and Washington, D.C., its already hit one of your campuses in Kansas.”

    Concerns About Making Payroll

    Minnesota’s private colleges are worried as well. On Monday, the state’s independent-college association sent a letter to its Congressional delegation, warning that some colleges would be unable to make their payroll obligations this week.

    “The failure of the House to adopt the recovery plan this afternoon has immediate implications for private colleges in Minnesota,” the letter reads. “As a result of the frozen capital markets and the failure of Congress to adopt a reasonable recovery plan, many of the members of our association are at the edge of their abilities to adapt. Any further delay by Congress or the administration will have immediate devastating effects on these institutions and the families they serve.”

    Colleges with larger endowments, like the University of Vermont, may find it easier to adapt. Daniel M. Fogel, the university's president, said his institution has “tens of millions of dollars” invested in the short-term funds, but he expects that it will be able to make do.

    “We may need to rely on some other liquidity sources, but if so, very briefly, because then we’ll be collecting the spring tuition,” he said.

    Russell K. Osgood, the president of Grinnell College, in Iowa, said his institution has a “modest amount” invested in the fund and did “not foresee any impact.” But he said he feared for some of his colleagues.

    “I’m scared thinking about others who are more dependent on it,” he said.


    Question
    Where will the bailout end?

    Answer:  Why not bail out everybody and everything? It's not real money anyway --- http://www.trinity.edu/rjensen/2008Bailout.htm#NationalDebt

    From The Wall Street Journal Accounting Weekly Review on October 3, 2008

    U.S. Auto Makers Seek Bailout for Bad Car Loans
    by Aparajita Saha-Bubna
    The Wall Street Journal

    Oct 01, 2008
    Page: B3
    Click here to view the full article on WSJ.com
     

    TOPICS: Accounting, Allowance For Doubtful Accounts, Bad Debts, Banking, Bankruptcy, Mark-to-Market Accounting

    SUMMARY: U.S. auto companies are hoping a new bailout plan could stem a growing credit crisis that threatens to further crimp their industry. The article concludes with the comment that, since two auto manufacturer's financing arms, GMAC and Chrysler Financial, have been sold to Cerberus Capital Management LP, "each is now being run to maximize profits, not auto sales."

    CLASSROOM APPLICATION: This article may be used to further enhance students understanding of automobile financing and allowances for bad debts.

    QUESTIONS: 
    1. (Introductory) How were the automotive financing companies created? Who now owns General Motors Acceptance Corp. and Chrysler Financial Corp?

    2. (Introductory) How are automobile financing companies affected by the current financial crisis? How are they affecting the automobile manufacturing industry itself? Do you think legislators should consider helping the automotive industry, as they have with the financial sector? Support your answer.

    3. (Advanced) Why does the author say that GMAC and Chrysler Financial are "...now being run to maximize profits, not auto sales"? Is there a difference? Explain.

    4. (Advanced) Why are automotive companies no longer supporting leases for their automobiles? How will this change also impact consumers and the automotive industry?
     

    Reviewed By: Judy Beckman, University of Rhode Island
     

    RELATED ARTICLES: 
    Why It's Getting Hard to Lease a Car
    by Nathan Becker
    Aug 10, 2008
    Online Exclusive
     

     

    "U.S. Auto Makers Seek Bailout for Bad Car Loans Relief Plan, Part of Original Wall Street Rescue Package, Could Free Up Loans for Car Dealers as Well as Their Customers," by Aparajita Saha-Bubna, The Wall Street Journal, October 3, 2008 ---
    http://online.wsj.com/article/SB122279948758891109.html?mod=djem_jiewr_AC

    As Congress revises a bailout plan for Wall Street, U.S. auto companies hope the new package will stem a growing credit crisis that threatens to further crimp their industry.

    The original $700 billion Wall Street deal, which was rejected by the House on Monday, included a substantial bailout for auto lenders. These companies hold a stable of bad auto loans that could shrink in value and hurt both the lenders and the vehicle makers. This bailout would have been separate from the $25 billion in low-cost loans for U.S. auto makers that President Bush signed into law Tuesday.

    Because of constrained capital, GMAC LLC, partially owned by General Motors Corp.; Ford Motor Credit; and Chrysler Financial, which finances Chrysler LLC's vehicles, have tightened lending standards in recent months. The tightening happened just as the lenders decided to pull out of the risky practice of leasing vehicles, which had long represented about 20% of new-vehicle financing arrangements. The combination of tougher-to-get loans and absence of leasing stung auto makers during the summer selling season.

    A Washington bailout of bad car loans could loosen the flow of financing for potential car buyers and spark demand for new cars and trucks. It likely would free up funds that could be invested in securities backed by auto loans, bringing down borrowing costs for auto lenders.

    In August, tight credit caused General Motors to lose sales of roughly 10,000 to 12,000 vehicles, the car maker said. When extrapolated across the entire U.S. industry, that was the equivalent of 40,000 lost sales, or about $1 billion in revenue.

    The growing credit crunch in the auto industry is expected to have wreaked havoc on September vehicle sales, which will be reported Wednesday. Research firm J.D. Power & Associates expects a 26% volume decline compared with the same month in 2007.

    "There are still quite a few deals getting done, but they require a lot more work and a lot more back-and-forth between the bank and the dealer," said Earl Hesterberg, chief executive of Houston-based dealer chain Group 1 Automotive Inc. "It's become significantly more difficult, particularly in the last month."

    John Bergstrom, owner of the Bergstrom Automotive Group dealership chain in Wisconsin, said the buyers having the most trouble are those who are trading in a car they have owned for just a few years. Because they don't have much equity in their vehicle, or may even owe more on the loan than the car is worth, banks increasingly are requiring these buyers to produce hefty down payments.

    "The challenge is affordability," Mr. Bergstrom said. "People's bills are getting higher, and then they're squeezed on gasoline and they're squeezed on milk and so forth. When they look at a car, they say they can't really afford them."

    The tightening also has hit dealers as the car makers' finance arms raise the cost of the "floor plan" credit they offer dealers to buy cars for their inventory. Dealers typically repay lenders for these loans as each vehicle is sold.

    Existing bonds made up of floor-plan loans of the three auto-finance arms total $25.8 billion, according to data provider ABSNet. Ford Motor Credit and GMAC lead with $12.7 billion and $10.6 billion, respectively. Both companies have had unprecedented trouble attracting investors in floor-plan assets in recent months, people familiar with the matter have said.

    That has prompted the finance companies to get tougher on dealers with weak finances, raising their rates and fees for some. This makes it costlier for dealers to buy cars, eroding their margins. In addition, dealer inventories are getting leaner, meaning potential car buyers have fewer options to choose from.

    And since GMAC and Chrysler Financial are both controlled by private-equity group Cerberus Capital Management LP, each is now being run to maximize profits, not auto sales. Last week, one of GM's largest Chevrolet dealers, Bill Heard Enterprises, closed all 14 of its dealerships after GMAC canceled the dealer's credit line.

    Peter, Paul, and Barney: An Essay on 2008 U.S. Government Bailouts of Private Companies ---
    http://www.trinity.edu/rjensen/2008Bailout.htm


    Reinventing the American Dream

    "Reinventing the American Dream," by Christopher Jencks, Chronicle of Higher Education, October 17, 2008 ---
    http://chronicle.com/free/v55/i08/08b00601.htm?utm_source=cr&utm_medium=en 

              The American Dream sounds like apple pie and motherhood. Everyone is for it.

    But when everyone endorses an ideal, whether it's the American Dream, equal opportunity, or justice, you can be pretty sure that they disagree about what the ideal means, and that the appearance of agreement is being achieved by talking past one another.

    There are at least two competing versions of the American Dream, and they are not only different but mutually incompatible. Perhaps even more alarming is the fact that they will both need to be reinvented if our children and grandchildren are to inhabit a livable planet.

    In one version, this country is the place where anyone who builds a better mousetrap can get rich. To do that, the mousetrap builder will need a lot of help: workers to make the mousetraps, salespeople to put them in the hands of consumers, and security guards to prevent the world from beating a path to the inventor's door and helping themselves. In order to get rich, mousetrap developers will also have to pay their workers far less than they make themselves. Otherwise there won't be enough money left over from mousetrap sales to make the inventor rich.

    This version of the American Dream emphasizes individual talent and effort. It favors freedom and opposes government regulation. And it belongs to the Republican Party.

    Democrats have another version of the American Dream: Everyone who works hard and behaves responsibly can achieve a decent standard of living. But the definition of a decent standard of living is a moving target. For those who came of age before 1950, it usually meant a steady job, owning a house in a safe neighborhood with decent schools, and believing that your children would have a chance to go to college even if you did not.

    True, lots of people who worked hard and behaved responsibly didn't realize this dream. Blue-collar workers were laid off during recessions through no fault of their own, and their jobs often disappeared when technological progress allowed employers to produce more stuff with fewer workers. Still, more and more people achieved this dream between 1945 and 1970, so the Democratic version of the American Dream had broader appeal than the Republican version, in which a smaller number of people could get much richer.

    Since the early 1970s, however, all that has changed.

    The American economy has been under siege. Real per capita disposable income has continued to grow, but the average annual increase has fallen, from 2.7 percent between 1947 and 1973 to 1.8 percent between 1973 and 2005. Of course, even a 1.8-percent annual increase in purchasing power is far more than the human species achieved during most of its history, and it is also far more than we are likely to achieve in the future unless we do a lot of creative accounting.

    What transformed the political landscape was not the slowdown in growth but the distributional change that accompanied it. From 1947 to 1973, the purchasing power of those in the bottom 95 percent of the income distribution rose at the same rate as per capita disposable income, about 2.7 percent a year. Among families in the top 5 percent, the growth rate was 2.2 percent. From 1973 to 2006, however, the average annual increase in the purchasing power of the bottom 95 percent was only .6 percent. The top 5 percent, in contrast, managed to maintain annual growth of 2.0 percent, which was almost the same as what they enjoyed before 1973.

    That's a lot of numbers, but what my students at the Kennedy School call the "take-away" is pretty simple: After 1973, when economic growth slowed, America had a choice. We could have tried to share the pain equally by maintaining the social contract under which living standards had risen at roughly the same rate among families at all levels. Or we could have treated the slowdown in growth as evidence that the Democratic version of the American Dream didn't work, and that we should try the Republican version, in which we all look out for ourselves, some people get rich, and most get left behind.

    We chose the Republican option.

    That formulation is deceptive, of course, because voters did not have a clear choice. Many Democratic politicians accepted the Republican argument that the cure for slower growth was to make markets more competitive and government regulation less onerous. Very few Democrats argued that an adverse shift in the distribution of private-sector earnings was something the government should insure Americans against, like a Mississippi flood or a terrorist attack on the World Trade Center. In that respect the Democrats were very different from the parties of the left in Western Europe, but quite similar to the parties of the left in most other English-speaking countries.

    One reason for Anglophone caution about protecting the citizenry from an adverse shift in the distribution of income is that English-speaking economists (which is to say almost all economists, even in non-English-speaking countries) were mostly blaming the rise in economic inequality on what they called "skill-biased technological change." That argument was correct as far as it went, but it didn't go very far and was therefore deeply misleading.

    In their new book, The Race Between Education and Technology (Belknap Press/Harvard University Press, 2008), Claudia Goldin and Lawrence F. Katz argue — convincingly, in my view — that demand for skilled workers has indeed risen since 1973. But they also argue that demand for skilled workers rose no faster after 1973 than it had between 1910 and 1973.

    What changed was that before 1973, the supply of skilled workers grew at about the same rate as demand, so relative wages were fairly stable. After 1973 the supply of skilled workers grew far more slowly, even though demand kept rising. That imbalance played a significant role in raising inequality, at least between 1975 and 2000.

    Between 1940 and 1980, the number of years of school completed by the average worker rose almost one year every decade (actually, .86 years). Between 1980 and 2005, the increase was only half that (.43 years per decade). If you exclude GED's, administrative data indicate that high-school graduation rates have hardly changed since the early 1970s. At the same time, immigration has increased the supply of unskilled workers.

    Those changes might not have led to a deterioration of wages and working conditions among unskilled workers if we had tried to protect their livelihoods, but we didn't. Congress and presidents let the minimum wage lag farther and farther behind inflation from 1981 to 2006. Large employers and the National Labor Relations Board made it harder to organize unions. Weaker unions found it harder to protect their members, and that, in turn, reduced the number of workers who wanted to join.

    Again, this is a complicated story, but the take-away is pretty straightforward. Since 1973 both the federal government and the states have made less effort to raise the educational attainment of the young. They have also made less effort to protect the incomes of the less educated.

    Why should that be? I'm not sure, but I have a hypothesis. Forty-some years ago, I was attending a White House conference on higher education and ran into Edmund G. (Pat) Brown, who was then governor of California, as we waited for an elevator. I had been studying at the University of California, and I asked him about the university's budget problems.

    Brown, a Democrat, said the university always had budget problems when the Democrats controlled the state. Having always thought of Democrats as big spenders and friends of education, I was startled and asked why, just as we reached his floor. His parting answer was (roughly): "Democrats want to spend money on everything; Republicans only want to spend money on highways and the university, where they went and expect to send their children."

    I don't know if that hypothesis holds up empirically, but I do think one big reason we have done so little to raise educational attainment since 1973 is that both federal and state budgets are much tighter. We cut the share of the gross domestic product going to national defense from 10 percent in 1959 to 5.5 percent in 1973 to 4.0 percent in 2006. But since 1973, that reduction has been more than offset by the government's increased spending on health care and Social Security. Even expenditures per student on K-through-12 education have risen faster than expenditures per student on higher education. According to the National Center for Education Statistics, expenditures per student in public elementary and secondary schools doubled between 1970-71 and 2000-1, even adjusted for inflation. Real expenditures per student in public colleges and universities rose only 35 percent during that period.

    One alternative to keeping young people in school longer might have been to regulate the economy in ways analogous to what Germany, France, the Low Countries, and Scandinavia did to keep wages relatively equal. In truth, though, we would have had to both expand education and regulate the labor market to keep alive the Democratic version of the American Dream. Regulation arouses even more resistance from employers than does taxation. And unlike their European counterparts, American employers usually have something close to a veto over policy changes that don't involve national security.

    Employers argue that regulating the market drives up costs and slows job growth. Growth statistics for the past 50 years offer some support for that claim. But since 1970, annual growth has been only about a tenth of a percentage point higher in inegalitarian countries than in egalitarian countries. To be sure, income is not all that matters, and dumb regulations can certainly slow job growth and generate high unemployment. But there is no reason why egalitarian regulations have to be dumb.

    In any case, few Democratic politicians think voters would accept that approach to solving the economic problems of the bottom 95 percent, and I think they are right, at least in the short run. In the long run, a concerted effort to revive a Democratic version of the American Dream might change the rhetorical environment, but meanwhile, the Democrats would have to resign themselves to a long period in the wilderness, with no assurance that their strategy would ever appeal to most voters. Few politicians want to take such a risk.

     

    "Debtor Nation," by Clive Crook, Chronicle of Higher Education, October 24, 2008 ---
    http://chronicle.com/weekly/v55/i09/09b09901.htm?utm_source=cr&utm_medium=en 

    The intense financial crisis that started in the American housing market is going to make it difficult, for quite a while yet, to concentrate on remoter issues such as demographic pressures and long-term trends in saving. That is a pity, because when legislators are ready to turn their attention back in that direction, the problems confronting them will be that much worse. Americans are saving less, living longer, and retiring in a cluster. It is a potent combination that will profoundly disrupt the country's economy and politics. The government, the financial markets, and the ordinary households of the United States seem equally unprepared.

    Fiscal stress is just one manifestation. Within a decade or so, payments from the Social Security system will exceed tax revenues paid in. Keeping benefits at the present level will eventually require tax increases and/or cuts in other programs. The soaring costs of Medicare — also the result, in part, of demographic pressures — will add hugely to the fiscal burden. The well-trodden line of least resistance to that prospect is to let the budget deficit and the public debt expand. Andrew L. Yarrow's Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Irresponsibility (Yale University Press, 2008) is a valuable primer on the harm that would do.

    Yarrow, vice president and Washington director of the nonpartisan research group Public Agenda and a visiting professor of American history at American University, explores the implications for taxes, private investment, and growth but puts even more emphasis on the crowding-out effects of Social Security and Medicare on other programs. That is a point that some liberals are apt to miss. Politics puts limits on how high taxes can go. Remorseless pressure from Social Security and Medicare will push taxes and the public debt higher, but it will also squeeze, is already squeezing, other public investments — in education and infrastructure, for instance.

    Yarrow's approach is appealingly nonsectarian. He calls for a more effective safety net to protect against catastrophic illness, loss of job, and helplessness in old age. But he also urges that citizens be asked to take greater responsibility. An effective safety net, he argues, does not imply "pensions for healthy middle-aged Americans or health-care coverage that pays most costs for almost any care they want." People have an obligation, he argues, to meet the costs of predictable contingencies. To do that, they must save.

    But they don't. Ronald T. Wilcox's Whatever Happened to Thrift?: Why Americans Don't Save and What to Do About It (Yale, 2008) is another useful, slender primer, concentrating not on national choices but on the saving and spending decisions of individuals and households. Its complementary perspective makes it a good companion to Forgive Us Our Debts.

    Wilcox, a professor at the University of Virginia's Darden School of Business, starts by affirming that the problem of low personal savings is real — for the economy as a whole but particularly for poor households. Then he turns to causes and remedies. Emphasizing the social psychology of saving, he puts much of the blame for low saving on rising inequality and the consequent demands of keeping up with the Joneses: "The psychology of memory, the sociology of reference-group communication, and the economics of a widening income distribution combine to form a powerful witches' brew of self-defeating consumption behavior."

    He has some good, common-sense advice about how to save more intelligently. He calls on companies to do more to encourage their employees to save — for instance, by setting default enrollment policies on 401(k) plans so that workers are included automatically unless they choose otherwise. And he briefly makes the case for an array of policy changes, both large (tax consumption rather than income) and small (improve the marketing of U.S. Savings Bonds). He covers a lot of ground quickly and well.

    Missing, I think, is a sufficient emphasis on housing and tax-subsidized mortgage borrowing. Many American families chose to save by accumulating equity in their homes. The government's policy was to encourage that through the tax system and in other ways. Then came the housing-market collapse. Falling prices and rising foreclosures have left many households with no savings, no home equity, and no home. The tax regime for housing loans is deeply implicated in the national syndrome of borrowing too much and saving too little.

    Three other new books focus more tightly on pensions and retirement. All start from the position that the traditional model of income in retirement — Social Security plus employer-provided pensions — is defunct. The main reason is not forthcoming pressures on Social Security, real as those are, but the demise of the defined-benefit pension.

    Roger Lowenstein, one of the country's best financial journalists, gives an absorbing account of that story through three case studies, in While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis (Penguin Press, 2008). At the end of the 1960s, 60 percent of the private-sector work force had guaranteed pensions linked to earnings. Today the figure is less than 20 percent. Many of the remaining schemes, public and private, are underfinanced and in jeopardy. Companies have learned from General Motors' calamitous experience, which the book recounts in fascinating detail, and are no longer starting pension plans. In their place is the typically far less generous, and (from the retiree's point of view) much riskier, 401(k).

    No pension, meager savings, Social Security and Medicare under strain — in the future, many are going to find retirement a severe financial shock.

    Then why not keep working? Alicia H. Munnell and Steven A. Sass, of Boston College's Center for Retirement Research, examine that question in Working Longer: The Solution to the Retirement Income Challenge (Brookings Institution Press, 2008), and explain that the idea is not quite as simple as it seems.

    They reckon that three extra years of employment — a shift in the average retirement age from 63 to 66 — would be needed to keep income-replacement ratios at their present level through 2030. That would still leave workers with a longer retirement than was typical a few decades ago. (The average retirement age in 1960 was 66. A man retiring at that age could expect to live another 13 years. Since then male life expectancy has increased by roughly five years.) But the people with the least savings and the greatest need to work longer will be the low-paid, the unskilled, and those in poor health — the very workers who will find it most difficult to keep their jobs.

    Munnell and Sass note that the end of the defined-benefit pension has had a further, little-noticed consequence. It militates against "orderly departures" from the work force. "Employers face the prospect of workers with declining productivity and inadequate 401(k) balances hanging on much longer than desirable. Employers will need new tools, including an orderly severance process, to manage an older work force. Without such tools, employers will avoid older workers."

    Teresa Ghilarducci, a professor of economics at the New School, rejects the idea that living longer ought to imply working longer. In When I'm Sixty-Four: The Plot Against Pensions and the Plan to Save Them (Princeton University Press, 2008), she proposes a system to replace 70 percent of preretirement income after 40 years of work. People who wished to work longer could do so, but they would not be forced to by a lack of retirement income. Her key proposal is a mandatory system of guaranteed retirement accounts. Workers not in defined-benefit schemes would put 5 percent of earnings (up to the Social Security earnings cap) into a fund managed by the Social Security Administration; that fund would be invested, and the government would guarantee an inflation-adjusted return of 3 percent a year on each worker's account. A $600 refundable tax credit would offset the cost for low-income workers. Balances would be converted to inflation-indexed annuities upon retirement.

    When I'm Sixty-Four is an excellent book — not the clearest or best written, but the most thorough on the pensions issue — and makes a bold and workable proposal. It calls, in effect, for a combined expansion and partial privatization of Social Security, with a firmly progressive tweak to the tax code thrown in. The guaranteed retirement account itself, which is modeled on the TIAA-CREF scheme for college professors, has much in common, Ghilarducci says, with systems in Sweden, Italy, and elsewhere. There is no financial or economic reason that it could not work — but it is a stretch, politically, as she half-acknowledges. (It might be less of a stretch if she met more-timid reformers halfway and relaxed her opposition to a slightly higher retirement age.)

    Once the present crisis subsides, the retirement-income problem can be solved. The economics is straightforward. All the government has to do is tell voters to pay more taxes, hand over part of their earnings for safekeeping, and work a few extra years.

    The difficulty is to propose that solution and still get elected.

    Clive Crook writes for The Financial Times, Atlantic, and National Journal. He was formerly deputy editor of The Economist and has served as a consultant to the World Bank and as an official in the British Treasury.

    Bob Jensen's threads on entitlements are at http://www.trinity.edu/rjensen/entitlements.htm

    Peter, Paul, and Barney: An Essay on 2008 U.S. Government Bailouts of Private Companies ---
    http://www.trinity.edu/rjensen/2008Bailout.htm

     


    "Market and Political/Regulatory Perspectives on the Recent Accounting Scandals," by Ray Ball at the University of Chicago, SSRN, September 17, 2008 --- (free download) --- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1272804

    Not surprisingly, the recent accounting scandals look different when viewed from the perspectives of the political/regulatory process and of the market for corporate governance and financial reporting. We do not have the opportunity to observe a world in which either market or political/regulatory processes operate independently, and the events are recent and not well-researched, so untangling their separate effects is somewhat conjectural. This paper offers conjectures on issues such as: What caused the scandalous behavior? Why was there such a rash of accounting scandals at one time? Who killed Arthur Andersen – the SEC, or the market? Did fraudulent accounting kill Enron, or just keep it alive for too long? What is the social cost of financial reporting fraud? Does the US in fact operate a “principles-based” or a “rules-based” accounting system? Was there market failure? Or was there regulatory failure? Or both? Was the Sarbanes-Oxley Act a political and regulatory over-reaction?

    Jensen Comment
    Although Professor Ball is best known for empirical research of capital markets data, the above article is best described as a commentary of his personal opinion. On many issues I agree with him, but on some issues I disagree.

     

    Would market forces have killed Enron even if there was no criminal case for document destruction?

    Ray Ball (opinion with no supporting evidence)
    I conclude that market forces, left to their own devices, would have closed Andersen.

    Bob Jensen (agrees completely with supporting evidence)
    I don't think there's any doubt that Andersen would've folded due to market forces of a succession of failed audits for which it did not change its fundamental behavior and questions of auditor independence after losing a succession of failed audit lawsuits prior to Enron. For example, it continued to hire hire the in-charge auditor of Waste Management even after his felony conviction.

    When the Securities and Exchange Commission found evidence in e-mail messages that a senior partner at Andersen had participated in the fraud at Waste Management, Andersen did not fire him. Instead, it put him to work revising the firm's document-retention policy. Unsurprisingly, the new policy emphasized the need to destroy documents and did not specify that should stop if an S.E.C. investigation was threatened. It was that policy David Duncan, the Andersen partner in charge of Enron audits, claimed to be following when he shredded Andersen's reputation.
    Floyd Norris, "Will Big Four Audit Firms Survive in a World of Unlimited Liability?," The New York Times, September 10, 2004


    Although Ray Ball does not cite the empirical evidence, there is empirical evidence that ultimately, due to a succession of incompetent or fraudulent audits, having Andersen as an auditor raised a client's cost of capital.

    "The Demise of Arthur Andersen," by Clifford F. Thies, Ludwig Von Mises Institute, April 12, 2002 --- http://www.mises.org/fullstory.asp?control=932&FS=The+Demise+of+Arthur+Andersen

    From Yahoo.com, Andrew and I downloaded the daily adjusted closing prices of the stocks of these companies (the adjustment taking into account splits and dividends). I then constructed portfolios based on an equal dollar investment in the stocks of each of the companies and tracked the performance of the two portfolios from August 1, 2001, to March 1, 2002. Indexes of the values of these portfolios are juxtaposed in Figure 1.

    From August 1, 2001, to November 30, 2001, the values of the two portfolios are very highly correlated. In particular, the values of the two portfolios fell following the September 11 terrorist attack on our country and then quickly recovered. You would expect a very high correlation in the values of truly matched portfolios. Then, two deviations stand out.

     

    In early December 2001, a wedge temporarily opened up between the values of the two portfolios. This followed the SEC subpoena. Then, in early February, a second and persistent wedge opened. This followed the news of the coming DOJ indictment. It appears that an Andersen signature (relative to a "Final Four" signature) costs a company 6 percent of its market capitalization. No wonder corporate clients--including several of the companies that were in the Andersen-audited portfolio Andrew and I constructed--are leaving Andersen.

    Prior to the demise of Arthur Andersen, the Big 5 firms seemed to have a "lock" on reputation. It is possible that these firms may have felt free to trade on their names in search of additional sources of revenue. If that is what happened at Andersen, it was a big mistake. In a free market, nobody has a lock on anything. Every day that you don’t earn your reputation afresh by serving your customers well is a day you risk losing your reputation. And, in a service-oriented economy, losing your reputation is the kiss of death.

     

    Did (undetected) fraudulent accounting keep Enron alive too long?

    Ray Ball
    It is difficult to escape the conclusion that market forces caused Enron’s bankruptcy, for the simple reason that it had invested enormous sums and by 2000 was not generating profits. Conversely, its accounting transgressions kept the company alive for some period (perhaps one or two years) longer than would have occurred if it had reported its true profitability. The welfare loss arose from keeping an unprofitable company alive longer than optimal, and wasting capital and labor that were better used elsewhere.

    Bob Jensen (disagrees with the power of GAAP in the case of Enron)
    I think Ray Ball is attributing too much to financial reports of past transactions. Even if Enron's financial reports were "true" in terms of conformance with GAAP, the market may well have kept Enron alive because of profit potential of some of the huge, albeit presently losing, ventures. The counter example here is the more legitimate reporting losses in Amazon.com  for almost its entire history and the willingness of investors to "bet on the come" of Amazon's ventures in spite of the reported losses in conformance with GAAP. Furthermore, Enron's executives were so skilled at sales pitches, I think Enron might've actually kept going much, much longer if it conformed to GAAP and simply pitched its sweet-sounding ventures and political connections in Washington DC. Enron was primarily brought down by fraud that commenced to appear in the media and the pending lawsuits that formed overhead due to the fraud.

     

    Who killed Enron – the SEC or the market?

    Ray Ball
    It is difficult to escape the conclusion that market forces caused Enron’s bankruptcy, for the simple reason that it had invested enormous sums and by 2000 was not generating profits. Conversely, its accounting transgressions kept the company alive for some period (perhaps one or two years) longer than would have occurred if it had reported its true profitability. The welfare loss arose from keeping an unprofitable company alive longer than optimal, and wasting capital and labor that were better used elsewhere.

    Bob Jensen (disagrees because losing divisions could've been dropped in favor of continued operations of highly profitable divisions)
    What Ray does not seek out is the first tip of the demise of Enron. The single event that commenced Enron's dominos to fall has to be the reporting of illegal related party transactions by a Wall Street Journal Reporter. Once these became known, the SEC had to act and commenced a chain of events from which Enron could not possibly survive in terms of lawsuits and market reactions with lawsuit risks that bore down on the market prices of Enron shares.

    After John Emshwiller's WSJ report, determining whether the market or the SEC brought down Enron is a chicken versus egg question!

    Eichenwald states the following on pp. 490-492 in Conspiracy of Fools --- http://www.trinity.edu/rjensen/FraudEnronQuiz.htm#22

    It was section eight, called "Related Party Transactions," that got John Emshwiller's juices flowing.

    After being assigned to follow the Skilling resignation, Emshwiller had put in a request for an interview, then scrounged up a copy of Enron's most recent SEC filing in search of any nuggets.

    What he found startled him.  Words about some partnerships run by an unidentified "senior officer."  Arcane stuff, maybe, but the numbers were huge.  Enron reported more than $240 million in revenues in the first six months of the year from its dealings with them.

    One fact struck Emshwiller in particular.  This anonymous senior officer, the filing said, had just sold his financial interest in the partnerships.  Now, it said, the partnerships were no longer related to Enron.

    The senior officer had just sold his interest, Skilling had just resigned.  The connection seemed obvious.

    Could Enron have actually allowed Jeff Skilling to run partnerships that were doing massive business with the company?  Now that, Emshwiller thought, would be a great story.

    Emshwiller was back on the phone with Mark Palmer.  With no better explanation for Skilling's resignation, he said, the Journal was going to dig through everything it could find.  Right now he was focusing on these partnerships.  Were those run by Skilling?

    "No, that's not Skilling," Palmer replied, almost nonchalantly.  "That's Andy Fastow."

    A pause.  "Who's Andy Fastow?" Emshwiller asked.

    The message was slipped to Skilling later that day.  A Journal reporter was pushing for an explanation of his departure and now was rooting around, looking for anything he could find.  Probably best just to give the paper a call.

    Emshwiller was at his desk when the phone rang.

    "Hi," a soft voice said.  "It's Jeff Skilling."

    It was a startling moment.  Emshwiller had been on the hunt, and suddenly the quarry just walked in and lay down on the floor, waiting for him to fire.  So he did: why was Skilling quitting his job?

    "It's all pretty mundane," Skilling replied.  He'd worked hard and accomplished a lot but now had the freedom to move on.  His voice was distant, almost depressed.

    He and been ruminating about it for a while, Skilling went on, but had wanted to stay on at the company until the California situation eased up.  Then, he took the conversation in a new direction.

    "The stock price has been very disappointing to me," Skilling said.  "The stock is less than half of what it was six months ago.  I put a lot of pressure on myself.  I felt I must not be communicating well enough."

    Skilling rambled as Emshwiller took it down.  India.  California.  Expense cuts.  The good shape of Enron.

    "Had the stock price not done what it did..."  He paused.  "I don't think I would have felt the pressure to leave if the stock price had stayed up."

    What?  Had Emshwiller heard that right?  Was all this stuff about "personal reasons" out the window?  Had Skilling thrown in the towel because of the stock price?

    "What was that, Mr. Skilling?" Emshwiller asked.

    The employees at Enron owned lots of shares, Skilling said.  They were worried, always asking him about the direction of the price.  He found it very frustrating.

    "Are you saying that you don't think you would have quit if the stock price had stayed up?"

    Skilling was silent for several seconds.

    "I guess so," he finally mumbled.

    Minutes later, Emshwiller burst into his boss's office.  "You're not gong to believe what Skilling just told me!"
     

     

    What are the incentives to commit fraud?

    Ray Ball
    My view, based on mainly anecdotal experience, is that non-financial motives are more powerful than is commonly believed, and sometimes are the dominant reason for committing accounting fraud. An important motivator seems to be maintaining the esteem of one’s peers,ranging from co-workers to the public at large. Enron executives reportedly were celebrities in Houston, and in important places like the White House.

    Bob Jensen (disagrees as to level of importance of non-financial motives except in isolated instances such as possibly Ken Lay)
    Although there are instances where non-financial motives may have been powerful, I believe that they generally pale when compared to the financial reasons for committing all types of financial fraud, including accounting fraud --- http://www.trinity.edu/rjensen/FraudRotten.htm


     

    Was Sarbanes-Oxley Necessary?

    Ray Ball (who is generally critical of the need for Sarbanes-Oxley relative to market forces without such regulation and fraud penalties)
    Markets need rules, and rely on trust. U.S. financial markets historically had very effective rules by world standards, the rules were broken, and there were immense consequences for the transgressors.

    Bob Jensen (strongly disagrees)
    One need only look how the market-based system worldwide moved in cycles of being rotten to the core among the major corporations, investment banks, insurance companies, and credit rating companies --- http://www.trinity.edu/rjensen/FraudRotten.htm
    After getting caught these firms simply moved on to new schemes without fear of market forces.

    Nowhere is the wild west of market-based fraud more evident than in the timeline history of derivative financial instruments frauds --- http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds

    Frank Partnoy, Page 283 of a Postscript entitled "The Return"
    F.I.A.S.C.O. : The Inside Story of a Wall Street Trader
    by Frank Partnoy - 283 pages (February 1999) Penguin USA (Paper); ISBN: 0140278796 

    Perhaps we don' think we deserve a better chance. We play the lottery in record numbers, despite the 50 percent cut (taken by the government). We flock to riverboat casinos, despite substantial odds against winning. Legal and illegal gambling are growing just as fast as the financial markets, Las Vegas is our top tourist destination in the U.S., narrowly edging out Atlantic City. Are the financial markets any different? In sum, has our culture become so infused with the gambling instinct that we would afford investors only that bill of rights given a slot machine player:  the right to pull the handle, their right to pick a different machine, the right to leave the casino, abut not the right to a fair game.

     

     

    Infectious Greed:  How Deceit and Risk Corrupted the Financial Markets  (Henry Holt and Company, 2003, Page 17, ISBN 0-8050-7510-0)

    In February 1985, the United States Financial Accounting Standards Board (FASB) --- the private group that established most accounting standards (in the U.S.) --- asked whether banks should begin including swaps on their balance sheets, the financial statements that recorded their assets and liabilities . . .since the early 1980s banks had not included swaps as assets or liabilities . . . the banks' argument was deeply flawed. The right to receive money on a swap was a valuable asset, and the obligation to pay money on a swap was a costly liability.

    But bankers knew that the fluctuations in their swaps (swap value volatility) would worry their shareholders, and they were determined to keep swaps off their balance sheets (including mere disclosures as footnotes), FASB's inquiry about banks' treating swaps as off-balance-sheet --- a term that would become widespread during the 1991s --- mobilized and unified the banks, which until that point had been competing aggressively and not cooperating much on regulatory issues. All banks strongly opposed disclosing more information about their swaps, and so they threw down their swords and banded together a serveral high-level meetings.

     

    Infectious Greed:  How Deceit and Risk Corrupted the Financial Markets  (Henry Holt and Company, 2003, Page 77, ISBN 0-8050-7510-0)

    The process of transferring receivables to a new company and issuing new bonds became known as securitization, which became a major part of the structured finance industry . . . One of the most significant innovations in structured finance was a deal called the Collateralized Bond Obligation, or CBO. CBOs are one of the threads that run through the past fifteen years of financial markets, ranging from Michael Milken to First Boston to Enron and WorldCom. CBOs would mutate into various types of credit derivatives --- financial instruments tied to the creditworthiness of companies --- which would play and important role in the aftermath of the collapse of numerous companies in 2001and 2002.

    . . .

    In simple terms, here is how a CBO works. A bank transfers a portfolio of junk bonds to a Special Purpose Entity, typically a newly created company, partnership, or trust domiciled in a balmy tax haven, such as the Cayman Islands. This entity then issues several securities, backed by bonds, effectively splitting the junk bonds into pieces. Investors (hopefully) buy the pieces.

    . . .

    The first CBO was TriCapital Ltc., a $420 million deal sold in July 1988. There were about $900 million CBOs in 1988, and almost $ $3 billion in 1989. Notwithstanding the bad press junk bonds had been getting, analysts from all three of the credit-rating agencies began pushing CBOs. Ther were very profitable for the rating agencies, which received fees for rating the various pieces.

    . . .

    With the various types of structured-finance deals, a trend began of companies using Special Purpose Entities (SPEs) to hide risks. From an accounting perspective, the key question was whether a company that owned particular financial assets needed to disclose those assets in its financial statements even after it transferred them to an SPE. Just as derivatives dealers had argued that swaps should not be included in their balance sheets, financial companies began arguing that their interest in SPEs did not need to be disclosed . . . In 1991. the acting chief accountant of the SEC, concerned that companies might abuse this accounting standard, wrote a letter saying the outside investment had to be at least three percent (a requirement that helped implode Enron and its auditor Andersen because the three percent investments were phony):

     

    Infectious Greed:  How Deceit and Risk Corrupted the Financial Markets  (Henry Holt and Company, 2003, Page 229, ISBN 0-8050-7510-0)

    Third, financial derivatives were now everywhere --- and largely unregulated. Increasingly, parties were using financial engineering to take advantage of the differences in legal rules among jurisdictions, or to take new risks in new markets. In 1994, The Economist magazine noted, "Some financial innovation is driven by wealthy firms and individuals seeking ways of escaping from the regulatory machinery that governs established financial markets." With such innovation, the regulators' grip on financial markets loosened during the mid-to-late 1990s . . . After Long-Term Capital (Management) collapsed, even Alan Greenspan admitted that financial markets had been close to the brink.

    The decade was peppered with financial debacles, but these faded quickly from memory even as they increased in size and complexity. The billion dollar-plus scandals included some colorful characters (Robert Citron of Orange County, Nick Leeson of Barings, and John Meriwether of Long-Term Capital Management), but even as each new scandal outdid the others in previously unimaginable ways, the markets merely hic-coughed and then started going up again. It didn't seem that anything serious was wrong, and their ability to shake off a scandal made markets seem even more under control.
    Frank Portnoy, Infectious Greed (Henry Holt and Company, 2003, Page 2, ISBN 0-8050-7510-0).

     

    "Does the use of Financial Derivatives Affect Earnings Management Decisions?" by Jan Barton, The Accounting Review, January 2001, pp. 1-26.

    I present evidence consistent with managers using derivatives and discretionary accruals as partial substitutes for smoothing earnings. Using 1994-1996 data for a sample of Fortune 500 firms, I estimate a set of simultaneous equations that captures managers' incentives to maintain a desired level of earnings volatility through hedging and accrual management. These incentives include increasing managerial compensation and wealth, reducing corporate taxes and debt financing costs, avoiding underinvestment and earnings surprises, and mitigating volatility caused by low diversification. After controlling for such incentives, I find significant negative association between derivatives' notional amounts and proxies for the magnitude of discretionary accruals.

     
     

     

    Frank Partnoy introduces Chapter 7 of Infectious Greed as follows:

    Pages 187-188

    The regulatory changes of 1994-95 sent three messages to corporate CEOs.  First, you are not likely to be punished for "massaging" your firm's accounting numbers.  Prosecutors rarely go after financial fraud and, even when they do, the typical punishment is a small fine; almost no one goes to prison.  Moreover, even a fraudulent scheme could be recast as mere earnings management--the practice of smoothing a company's earnings--which most executives did, and regarded as perfectly legal.

    Second, you should use new financial instruments--including options, swaps, and other derivatives--to increase your own pay and to avoid costly regulation.  If complex derivatives are too much for you to handle--as they were for many CEOs during the years immediately following the 1994 losses--you should at least pay yourself in stock options, which don't need to be disclosed as an expense and have a greater upside than cash bonuses or stock.

    Third, you don't need to worry about whether accountants or securities analysts will tell investors about any hidden losses or excessive options pay.  Now that Congress and the Supreme Court have insulated accounting firms and investment banks from liability--with the Central Bank decision and the Private Securities Litigation Reform Act--they will be much more willing to look the other way.  If you pay them enough in fees, they might even be willing to help.

    Of course, not every corporate executive heeded these messages.  For example, Warren Buffett argued that managers should ensure that their companies' share prices were accurate, not try to inflate prices artificially, and he criticized the use of stock options as compensation.  Having been a major shareholder of Salomon Brothers, Buffett also criticized accounting and securities firms for conflicts of interest.

    But for every Warren Buffett, there were many less scrupulous CEOs.  This chapter considers four of them: Walter Forbes of CUC International, Dean Buntrock of Waste Management, Al Dunlap of Sunbeam, and Martin Grass of Rite Aid.  They are not all well-known among investors, but their stories capture the changes in CEO behavior during the mid-1990s.  Unlike the "rocket scientists" at Bankers Trust, First Boston, and Salomon Brothers, these four had undistinguished backgrounds and little training in mathematics or finance.  Instead, they were hardworking, hard-driving men who ran companies that met basic consumer needs: they sold clothes, barbecue grills, and prescription medicine, and cleaned up garbage.  They certainly didn't buy swaps linked to LIBOR-squared.
     

     

     

    I do agree with Ray Ball that regulation in and of itself is not panacea when either preventing or detecting fraud.

    "Greater Regulation of Financial Markets?" by Richard Posner, The Becker-Posner Blog, April 28, 2008 ---
    http://www.becker-posner-blog.com/

    Re-Regulate Financial Markets?--Posner's Comment I no longer believe that deregulation has been a complete, an unqualified, success. As I indicated in my posting of last week, deregulation of the airline industry appears to be a factor in the serious deterioration of service, which I believe has imposed substantial costs on travelers, particularly but not only business travelers; and the partial deregulation of electricity supply may have been a factor in the western energy crisis of 2000 to 2001 and the ensuing Enron debacle. The deregulation of trucking, natural gas, and pipelines has, in contrast, probably been an unqualified success, and likewise the deregulation of the long-distance telecommunications and telecommunications terminal equipment markets, achieved by a combination of deregulatory moves by the Federal Communications Commission beginning in 1968 and the government antitrust suit that culminated in the breakup of AT&T in 1983.

    Although one must be tentative in evaluating current events, I suspect that the deregulation (though again partial) of banking has been a factor in the current credit crisis. The reason is related to Becker's very sensible suggestion that, given the moral hazard created by government bailouts of failing financial institutions, a tighter ceiling should be placed on the risks that banks are permitted to take. Because of federal deposit insurance, banks are able to borrow at low rates and depositors (the lenders) have no incentive to monitor what the banks do with their money. This encourages risk taking that is excessive from an overall social standpoint and was the major factor in the savings and loan collapse of the 1980s. Deregulation, by removing a variety of restrictions on permitted banking activities, has allowed commercial banks to engage in riskier activities than they previously had been allowed to engage in, such as investing in derivatives and in subprime mortgages, and thus deregulation helped to bring on the current credit crunch. At the same time, investment banks such as Bear Sterns have been allowed to engage in what is functionally commercial banking; their lenders do not have deposit insurance--but their lenders are banks that for the reason stated above are happy to make risky loans.

    The Federal Deposit Insurance Reform Act of 2005 required the FDIC to base deposit insurance premiums on an assessment of the riskiness of each banking institution, and last year the Commission issued regulations implementing the statutory directive. But, as far as I can judge, the risk-assessed premiums vary within a very narrow band and are not based on an in-depth assessment of the individual bank’s riskiness.

    Now it is tempting to think that deregulation has nothing to do with this, that the problem is that the banks mistakenly believed that their lending was not risky. I am skeptical. I do not think that bubbles are primarily due to avoidable error. I think they are due to inherent uncertainty about when the bubble will burst. You don't want to sell (or lend, in the case of banks) when the bubble is still growing, because then you may be leaving a lot of money on the table. There were warnings about an impending collapse of housing prices years ago, but anyone who heeded them lost a great deal of money before his ship came in. (Remember how Warren Buffett was criticized in the late 1990s for missing out on the high-tech stock boom.) I suspect that the commercial and investment banks and hedge funds were engaged in rational risk taking, but that (except in the case of the smaller hedge funds--the largest, judging from the bailout of Long-Term Capital Management in 1998, are also considered by federal regulators too large to be permitted to go broke) they took excessive risks because of the moral hazard created by deposit insurance and bailout prospects.

    Perhaps what the savings and loan and now the broader financial-industry crises reveal is the danger of partial deregulation. Full deregulation would entail eliminating both government deposit insurance (especially insurance that is not experience-rated or otherwise proportioned to risk) and bailouts. Partial deregulation can create the worst of all possible worlds, as the western energy crisis may also illustrate, by encouraging firms to take risks secure in the knowledge that the downside risk is truncated.

    There has I think been a tendency of recent Administrations, both Republican and Democratic but especially the former, not to take regulation very seriously. This tendency expresses itself in deep cuts in staff and in the appointment of regulatory administrators who are either political hacks or are ideologically opposed to regulation. (I have long thought it troublesome that Alan Greenspan was a follower of Ayn Rand.) This would be fine if zero regulation were the social desideratum, but it is not. The correct approach is to carve down regulation to the optimal level but then finance and staff and enforce the remaining regulatory duties competently and in good faith. Judging by the number of scandals in recent years involving the regulation of health, safety, and the environment, this is not being done. And to these examples should probably be added the weak regulation of questionable mortgage practices and of rating agencies' conflicts of interest and, more basically, a failure to appreciate the gravity of the moral hazard problem in the financial industry.

     

    If auditors and their clients do not take there professional and ethical responsibilities more seriously then neither market forces nor regulators will prevent frauds from increasingly undermining our prized capital markets.

    Bob Jensen's Rotten to the Core threads are at http://www.trinity.edu/rjensen/FraudRotten.htm

    Bob Jensen's Fraud Conclusions are at http://www.trinity.edu/rjensen/FraudConclusion.htm

     


    Paul Krugman and Enron

    October 16, 2008 message from Jagdish Gangolly [gangolly@CSC.ALBANY.EDU]

    Paul (Williams),

    I hesitated responding to Paul's comment regarding the silence on AECM regarding the Economics Nobel prize (to Paul Krugman) since I have always felt that the field was not mature enough for a "Nobel" prize, compared with those in the sciences and literature. I also have felt that the Economics quasi-Nobel is a cruel joke upon those who receive it (imagine the rather sordid saga of Long Term Capital Management started by a gang of two Economics Nobelists).

    Then I came across the following blog that prompted me to respond. What provoked me was the inane comment in it about Krugman being an ex-economist because he dared step into the political fray concerning economic policy.

    In my opinion, the fetish of separation of economics from its sister social studies disciplines (as well as any discipline not yet infiltrated by mathematics or statistics) is an American (and nowadays increasingly British and European) fiction invented to bestow on it a measure of respectability by tortured mathematisation.

    Incidentally, this disease also afflicts us in accounting; perhaps all the economicizing of accounting theory over the last four decades is responsible.

    I suppose Mr. Luskin had no problems with the Nobel award to Milton Friedman or James Buchanan who were far more politically motivated and inclined than Krugman (who has been an equal opportunity critic).

    Imagine how wonderful the world would have been if Scholes or Merton had applied their brilliant intellects to the study of the unintended social consequences of their "theories" rather than dabbling in hedging. Particularly so since the phrase "unintended consequences" was coined by Merton's famous sociologist father Robert K. Merton. It was nauseating to hear Merton's pontificating (at the recent Harvard show) on the non-zero sum nature of the recent real estate market losses; what might he have been thinking of the losses at LTCM?

    Jagdish

    October 17, 2008 reply from Bob Jensen

    Hi Jagdish and Paul,

    Rumors are circulating that the liberal Swedes wanted to award a liberal economist as liberals are about to take monopoly control of both the executive and legislative branches of the United States.

    Be that as it may, Paul Krugman’s record on deregulation and derivatives markets is spotty, and he became a very belated critic of Enron after the horse was out of the barn about troubles in California. Recall that Andy Fastow used derivatives in his SPE frauds, and that Enron’s major source of revenue was in the energy derivatives market. Krugman was not criticizing derivatives in the late 1990s when he was a consultant to Enron (up to the point where Enron imploded). In reality he did not make a lot of money from Enron, but he also did not make waves about energy deregulation and derivatives markets until very late in the game.

    What I’m saying is that Paul Krugman has not been a consistent critic of market deregulation and derivatives trading. He did eventually become a critic of Enron’s California energy market manipulations, but this is after he was forced to resign his consultancy with Enron. His criticisms of Enron in Year 2000 really appeared only a short time before Enron’s fall in 2001 --- http://fpc.state.gov/documents/organization/9659.pdf

     Enron --- http://en.wikipedia.org/wiki/Paul_Krugman

    Krugman was one of many economists to serve as a consultant for an advisory board for Enron; he did this in 1999, being paid $37,500 before New York Times rules required him to resign when he took a job as a columnist in 2000. He stated later the consulting was to offer "Enron executives briefings on economic and political issues," and that it had required him to "spend four days in Houston."

    However, when the story of Enron's corporate scandals broke, critics accused him of having a conflict of interest and the job of having been a bribe to control media coverage, charges he denies forcefully. He points out that in columns written before and after the scandal, he disclosed his past Enron relationship when he wrote about the company. He was critical of the company: he was one of the first writers to argue that deregulation of the California energy market had led to market-manipulation by energy companies (in a column in the New York Times on December 10, 2000 called "California Screaming"); Enron was the largest in this market; he criticized it directly in August 17, 2001. He writes in The Great Unraveling (p. 26) that

     

    I was no more perceptive than anyone else; during the bull market years [of the late 1990s] some people did send me letters claiming that major corporations (read that Enron) were cooking their books, but - to my great regret - I ignored them. However, when Enron - the most celebrated company of its time, lauded as the very model of a modern business enterprise - blew up, I immediately saw the implications: if such a famous and celebrated company could have been a Ponzi scheme, it was very unlikely that the rest of U.S. business was squeaky clean. In fact, it quickly became clear, the bubble years were both the cause and effect of an epidemic of corporate malfeasance.

     His first column on the epidemic was published in The New York Times on February 1, 2002 with the title, "Two, Three, Many?"

    Bob Jensen’s threads on Enron are at http://www.trinity.edu/rjensen/FraudEnron.htm


    The Largest Earnings Management Fraud in History and Congressional Efforts to Cover it Up

    Without trying to place the blame on Democrats or Republicans, here are some of the facts that led to the eventual fining of Fannie Mae executives for accounting fraud and the firing of KPMG as the auditor on one of the largest and most lucrative audit clients in the history of KPMG. The restated earnings purportedly took upwards of a million journal entries, many of which were re-valuations of derivatives being manipulated by Fannie Mae accountants and auditors (PwC was charged with overseeing the financial statement revisions. 

     

    Fannie Mae may have conducted the largest earnings management scheme in the history of accounting.
     
    You can read the following at http://www.trinity.edu/rjensen/acct5341/speakers/133glosf.htm
     
    . . . flexibility also gave Fannie the ability to manipulate earnings to hit -- within pennies -- target numbers for executive bonuses. Ofheo details an example from 1998, the year the Russian financial crisis sent interest rates tumbling. Lower rates caused a lot of mortgage holders to prepay their existing home mortgages. And Fannie was suddenly facing an estimated expense of $400 million.

    Well, in its wisdom, Fannie decided to recognize only $200 million, deferring the other half. That allowed Fannie's executives -- whose bonus plan is linked to earnings-per-share -- to meet the target for maximum bonus payouts. The target EPS for maximum payout was $3.23 and Fannie reported exactly . . . $3.2309. This bull's-eye was worth $1.932 million to then-CEO James Johnson, $1.19 million to then-CEO-designate Franklin Raines, and $779,625 to then-Vice Chairman Jamie Gorelick.

    That same year Fannie installed software that allowed management to produce multiple scenarios under different assumptions that, according to a Fannie executive, "strengthens the earnings management that is necessary when dealing with a volatile book of business." Over the years, Fannie designed and added software that allowed it to assess the impact of recognizing income or expense on securities and loans. This practice fits with a Fannie corporate culture that the report says considered volatility "artificial" and measures of precision "spurious."

    This disturbing culture was apparent in Fannie's manipulation of its derivative accounting. Fannie runs a giant derivative book in an attempt to hedge its massive exposure to interest-rate risk. Derivatives must be marked-to-market, carried on the balance sheet at fair value. The problem is that changes in fair-value can cause some nasty volatility in earnings.

    So, Fannie decided to classify a huge amount of its derivatives as hedging transactions, thereby avoiding any impact on earnings. (And we mean huge: In December 2003, Fan's derivatives had a notional value of $1.04 trillion of which only a notional $43 million was not classified in hedging relationships.) This misapplication continued when Fannie closed out positions. The company did not record the fair-value changes in earnings, but only in Accumulated Other Comprehensive Income (AOCI) where losses can be amortized over a long period.

    Fannie had some $12.2 billion in deferred losses in the AOCI balance at year-end 2003. If this amount must be reclassified into retained earnings, it might punish Fannie's earnings for various periods over the past three years, leaving its capital well below what is required by regulators.

    In all, the Ofheo report notes, "The misapplications of GAAP are not limited occurrences, but appear to be pervasive . . . [and] raise serious doubts as to the validity of previously reported financial results, as well as adequacy of regulatory capital, management supervision and overall safety and soundness. . . ." In an agreement reached with Ofheo last week, Fannie promised to change the methods involved in both the cookie-jar and derivative accounting and to change its compensation "to avoid any inappropriate incentives."

    But we don't think this goes nearly far enough for a company whose executives have for years derided anyone who raised a doubt about either its accounting or its growing risk profile. At a minimum these executives are not the sort anyone would want running the U.S. Treasury under John Kerry. With the Justice Department already starting a criminal probe, we find it hard to comprehend that the Fannie board still believes that investors can trust its management team.

    Fannie Mae isn't an ordinary company and this isn't a run-of-the-mill accounting scandal. The U.S. government had no financial stake in the failure of Enron or WorldCom. But because of Fannie's implicit subsidy from the federal government, taxpayers are on the hook if its capital cushion is insufficient to absorb big losses. Private profit, public risk. That's quite a confidence game -- and it's time to call it.

     

    **********************************

    :"Sometimes the Wrong 'Notion':   Lender Fannie Mae Used A Too-Simple Standard For Its Complex Portfolio," by Michael MacKenzie, The Wall Street Journal, October 5, 2004, Page C3 

    Lender Fannie Mae Used A Too-Simple Standard For Its Complex Portfolio

    What exactly did Fannie Mae do wrong?

    Much has been made of the accounting improprieties alleged by Fannie's regulator, the Office of Federal Housing Enterprise Oversight.

    Some investors may even be aware the matter centers on the mortgage giant's $1 trillion "notional" portfolio of derivatives -- notional being the Wall Street way of saying that that is how much those options and other derivatives are worth on paper.

    But understanding exactly what is supposed to be wrong with Fannie's handling of these instruments takes some doing. Herewith, an effort to touch on what's what -- a notion of the problems with that notional amount, if you will.

    Ofheo alleges that, in order to keep its earnings steady, Fannie used the wrong accounting standards for these derivatives, classifying them under complex (to put it mildly) requirements laid out by the Financial Accounting Standards Board's rule 133, or FAS 133.

    For most companies using derivatives, FAS 133 has clear advantages, helping to smooth out reported income. However, accounting experts say FAS 133 works best for companies that follow relatively simple hedging programs, whereas Fannie Mae's huge cash needs and giant portfolio requires constant fine-tuning as market rates change.

    A Fannie spokesman last week declined to comment on the issue of hedge accounting for derivatives, but Fannie Mae has maintained that it uses derivatives to manage its balance sheet of debt and mortgage assets and doesn't take outright speculative positions. It also uses swaps -- derivatives that generally are agreements to exchange fixed- and floating-rate payments -- to protect its mortgage assets against large swings in rates.

    Under FAS 133, if a swap is being used to hedge risk against another item on the balance sheet, special hedge accounting is applied to any gains and losses that result from the use of the swap. Within the application of this accounting there are two separate classifications: fair-value hedges and cash-flow hedges.

    Fannie's fair-value hedges generally aim to get fixed-rate payments by agreeing to pay a counterparty floating interest rates, the idea being to offset the risk of homeowners refinancing their mortgages for lower rates. Any gain or loss, along with that of the asset or liability being hedged, is supposed to go straight into earnings as income. In other words, if the swap loses money but is being applied against a mortgage that has risen in value, the gain and loss cancel each other out, which actually smoothes the company's income.

    Cash-flow hedges, on the other hand, generally involve Fannie entering an agreement to pay fixed rates in order to get floating-rates. The profit or loss on these hedges don't immediately flow to earnings. Instead, they go into the balance sheet under a line called accumulated other comprehensive income, or AOCI, and are allocated into earnings over time, a process known as amortization.

    Ofheo claims that instead of terminating swaps and amortizing gains and losses over the life of the original asset or liability that the swap was used to hedge, Fannie Mae had been entering swap transactions that offset each other and keeping both the swaps under the hedge classifications. That was a no-go, the regulator says.

    "The major risk facing Fannie is that by tainting a certain portion of the portfolio with redesignations and improper documentation, it may well lose hedge accounting for the whole derivatives portfolio," said Gerald Lucas, a bond strategist at Banc of America Securities in New York.

    The bottom line is that both the FASB and the IASB must someday soon take another look at how the real world hedges portfolios rather than individual securities.  The problem is complex, but the problem has come to roost in Fannie Mae's $1 trillion in hedging contracts.  How the SEC acts may well override the FASB.  How the SEC acts may be a vindication or a damnation for Fannie Mae and Fannie's auditor KPMG who let Fannie violate the rules of IAS 133.

     

    Video on the efforts of some members of Congress seeking to cover up accounting fraud at Fannie Mae ---
    http://www.youtube.com/watch?v=1RZVw3no2A4

    Peter, Paul, and Barney: An Essay on 2008 U.S. Government Bailouts of Private Companies ---
    http://www.trinity.edu/rjensen/2008Bailout.htm


    "Failure in Urban Universities," by Kevin Carey, Inside Higher Ed, October 14, 2008 --- http://www.insidehighered.com/views/2008/10/14/carey 


    The 2008 Ig Nobel Awards (from Harvard) --- http://improbable.com/ig/winners/#ig2008
    The 1991-2007 winners are also listed.
    The Improbable Home Page is at http://improbable.com/

    NUTRITION PRIZE. Massimiliano Zampini of the University of Trento, Italy and Charles Spence of Oxford University, UK, for electronically modifying the sound of a potato chip to make the person chewing the chip believe it to be crisper and fresher than it really is.
    REFERENCE: "The Role of Auditory Cues in Modulating the Perceived Crispness and Staleness of Potato Chips," Massimiliano Zampini and Charles Spence, Journal of Sensory Studies, vol. 19, October 2004,  pp. 347-63.

    PEACE PRIZE. The Swiss Federal Ethics Committee on Non-Human Biotechnology (ECNH) and the citizens of Switzerland for adopting the legal principle that plants have dignity.
    REFERENCE: "The Dignity of Living Beings With Regard to Plants. Moral Consideration of Plants for Their Own Sake
    WHO ATTENDED THE CEREMONY: Urs Thurnherr, member of the committee.

    ARCHAEOLOGY PRIZE. Astolfo G. Mello Araujo and José Carlos Marcelino of Universidade de São Paulo, Brazil, for measuring how the course of history, or at least the contents of an archaeological dig site, can be scrambled by the actions of a live armadillo.
    REFERENCE: "The Role of Armadillos in the Movement of Archaeological Materials: An Experimental Approach," Astolfo G. Mello Araujo and José Carlos Marcelino, Geoarchaeology, vol. 18, no. 4, April 2003, pp. 433-60.

    BIOLOGY PRIZE. Marie-Christine Cadiergues, Christel Joubert,, and  Michel Franc of Ecole Nationale Veterinaire de Toulouse, France for discovering that the fleas that live on a dog can jump higher than the fleas that live on a cat.
    REFERENCE: "A Comparison of Jump Performances of the Dog Flea, Ctenocephalides canis (Curtis, 1826) and the Cat Flea, Ctenocephalides felis felis (Bouche, 1835)," M.C. Cadiergues, C. Joubert, and M. Franc, Veterinary Parasitology, vol. 92, no. 3, October 1, 2000, pp. 239-41.

    MEDICINE PRIZE. Dan Ariely of Duke University, USA, for demonstrating that high-priced fake medicine is more effective than low-priced fake medicine.
    REFERENCE: "Commercial Features of Placebo and Therapeutic Efficacy," Rebecca L. Waber; Baba Shiv; Ziv Carmon; Dan Ariely, Journal of the American Medical Association, March 5, 2008; 299: 1016-1017.
    WHO ATTENDED THE CEREMONY: Dan Ariely

    COGNITIVE SCIENCE PRIZE. Toshiyuki Nakagaki of Hokkaido University, Japan, Hiroyasu Yamada of Nagoya, Japan, Ryo Kobayashi of Hiroshima University, Atsushi Tero of Presto JST, Akio Ishiguro of Tohoku University, and Ágotá Tóth of the University of Szeged, Hungary, for discovering that slime molds can solve puzzles.
    REFERENCE: "Intelligence: Maze-Solving by an Amoeboid Organism," Toshiyuki Nakagaki, Hiroyasu Yamada, and Ágota Tóth, Nature, vol. 407, September 2000, p. 470.
    WHO ATTENDED THE CEREMONY: Toshiyuki Nakagaki, Ryo Kobayashi, Atsushi Tero

    ECONOMICS PRIZE. Geoffrey Miller, Joshua Tybur and Brent Jordan of the University of New Mexico, USA, for discovering that a professional lap dancer's ovulatory cycle affects her tip earnings.
    REFERENCE: "Ovulatory Cycle Effects on Tip Earnings by Lap Dancers: Economic Evidence for Human Estrus?" Geoffrey Miller, Joshua M. Tybur, Brent D. Jordan, Evolution and Human Behavior, vol. 28, 2007, pp. 375-81.
    WHO ATTENDED THE CEREMONY: Geoffrey Miller and Brent Jordan

    PHYSICS PRIZE. Dorian Raymer of the Ocean Observatories Initiative at Scripps Institution of Oceanography, USA, and Douglas Smith of the University of California, San Diego, USA, for proving mathematically that heaps of string or hair or almost anything else will inevitably tangle themselves up in knots.
    REFERENCE: "Spontaneous Knotting of an Agitated String," Dorian M. Raymer and Douglas E. Smith, Proceedings of the National Academy of Sciences, vol. 104, no. 42, October 16, 2007, pp. 16432-7.
    WHO ATTENDED THE CEREMONY: Dorian Raymer

    CHEMISTRY PRIZE. Sharee A. Umpierre of the University of Puerto Rico, Joseph A. Hill of The Fertility Centers of New England (USA), Deborah J. Anderson of Boston University School of Medicine and Harvard Medical School (USA), for discovering that Coca-Cola is an effective spermicide, and to Chuang-Ye Hong of Taipei Medical University (Taiwan), C.C. Shieh, P. Wu, and B.N. Chiang (all of Taiwan) for discovering that it is not.
    REFERENCE: "Effect of 'Coke' on Sperm Motility," Sharee A. Umpierre, Joseph A. Hill, and Deborah J. Anderson, New England Journal of Medicine, 1985, vol. 313, no. 21, p. 1351.
    REFERENCE: "The Spermicidal Potency of Coca-Cola and Pepsi-Cola," C.Y. Hong, C.C. Shieh, P. Wu, and B.N. Chiang, Human Toxicology, vol. 6, no. 5, September 1987, pp. 395-6. [NOTE: THE JOURNAL LATER CHANGED ITS NAME. NOW CALLED "Human & experimental toxicology"]
    WHO ATTENDED THE CEREMONY: Deborah Anderson, and C.Y. Hong's daughter Wan Hong

    LITERATURE PRIZE. David Sims of Cass Business School. London, UK, for his lovingly written study "You Bastard: A Narrative Exploration of the Experience of Indignation within Organizations."
    REFERENCE: "You Bastard: A Narrative Exploration of the Experience of Indignation within Organizations," David Sims, Organization Studies, vol. 26, no. 11, 2005, pp. 1625-40.
    WHO ATTENDED THE CEREMONY: David Sims

    Some Prior Winners in Economics

    1991
    ECONOMICS Michael Milken, titan of Wall Street and father of the junk bond, to whom the world is indebted.

    2001
    ECONOMICS
    Joel Slemrod, of the University of Michigan Business School, and Wojciech Kopczuk, of University of British Columbia [and who has since moved to Columbia University], for their conclusion that people find a way to postpone their deaths if that that would qualify them for a lower rate on the inheritance tax. [REFERENCE:"Dying to Save Taxes: Evidence from Estate Tax Returns on the Death Elasticity," National Bureau of Economic Research Working Paper No. W8158, March 2001.]

    2002
    ECONOMICS The executives, corporate directors, and auditors of Enron, Lernaut & Hauspie [Belgium], Adelphia, Bank of Commerce and Credit International [Pakistan], Cendant, CMS Energy, Duke Energy, Dynegy, Gazprom [Russia], Global Crossing, HIH Insurance [Australia], Informix, Kmart, Maxwell Communications [UK], McKessonHBOC, Merrill Lynch, Merck, Peregrine Systems, Qwest Communications, Reliant Resources, Rent-Way, Rite Aid, Sunbeam, Tyco, Waste Management, WorldCom, Xerox, and Arthur Andersen, for adapting the mathematical concept of imaginary numbers for use in the business world. [NOTE: all companies are U.S.-based unless otherwise noted.]

    2003
    ECONOMICS Karl Schwärzler and the nation of Liechtenstein, for making it possible to rent the entire country for corporate conventions, weddings, bar mitzvahs, and other gatherings.
    REFERENCE: <www.xnet.li> and <www.rentastate.com>
    WHO ATTENDED THE IG NOBEL CEREMONY: Karl Schwärzler.

    2004
    ECONOMICS The Vatican, for outsourcing prayers to India.

    2005
    ECONOMICS: Gauri Nanda of the Massachusetts Institute of Technology, for inventing an alarm clock that runs away and hides, repeatedly, thus ensuring that people DO get out of bed, and thus theoretically adding many productive hours to the workday.
    WHO ATTENDED THE IG NOBEL CEREMONY: Gauri Nanda

    2007
    ECONOMICS: Kuo Cheng Hsieh, of Taichung, Taiwan, for patenting a device, in the year 2001, that catches bank robbers by dropping a net over them.
    REFERENCE: U.S. patent #6,219,959, granted on April 24, 2001, for a "net trapping system for capturing a robber immediately."
    NOTE: The Ig Nobel Board of Governors attempted repeatedly to find Mr. Hsieh, but he seemed to have vanished mysteriously. Some days after the ceremony came news that he is alive and well.

    2008
    ECONOMICS  Geoffrey Miller, Joshua Tybur and Brent Jordan of the University of New Mexico, USA, for discovering that a professional lap dancer's ovulatory cycle affects her tip earnings.
     


    -----Original Message-----
    From: Carolyn Kotlas [mailto:kotlas@email.unc.edu]
    Sent: Friday, October 03, 2008 2:54 PM
    To: Jensen, Robert

    TL INFOBITS September 2008          No. 27            ISSN: 1931-3144

    About INFOBITS

     INFOBITS is an electronic service of The University of North Carolina at Chapel Hill ITS Teaching and Learning division. Each month the ITS-TL's Information Resources Consultant monitors and selects from a number of information and instructional technology sources that come to her attention and provides brief notes for electronic dissemination to educators.

    NOTE: You can read the Web version of this issue at  http://its.unc.edu/tl/infobits/bitsep08.php

    You can read all back issues of Infobits at http://its.unc.edu/tl/infobits/

    ......................................................................

     Virtual Worlds in Higher Education Instruction
    Games and Learning 
    Distance Learning
    Journal Archives Now Online 
    Carolina Conversations
    Recommended Reading

    Bob Jensen's related threads are at http://www.trinity.edu/rjensen/000aaa/thetools.htm

    ......................................................................

    EDITOR'S NOTE: Normally, Infobits does not focus on a single topic or theme, However, the recently-published abundance of papers, reports, and articles on using games or virtual worlds for teaching and learning has prompted me to devote most of this issue to these resources.

    ......................................................................

     VIRTUAL WORLDS IN HIGHER EDUCATION INSTRUCTION

     "Clearly there is a large and growing group of educators who believe that many good things, many very good things, are connected with virtual worlds. There are also still staunch critics yelling about what is wrong with virtual worlds. With many people engaging in this robust conversation today, it would be a great disservice to both the local and the global community not to have more institutions participating in the discussion."

          -- A. J. Kelton, "Virtual Worlds? 'Outlook Good'"

     The theme of the September/October 2008 issue of EDUCAUSE REVIEW is learning in virtual worlds. In "Higher Education as Virtual Conversation" Sarah Robbins-Bell explains how "using [virtual worlds] requires a shift in thinking and an adjustment in pedagogical methods that will embrace the community, the fluid identity, and the participation--indeed, the increased conversation--that virtual spaces can provide."

    Cynthia M. Calongne ("Educational Frontiers: Learning in a Virtual World") draws on the experience of teaching nine university courses using Second Life to discuss what is required for success in this teaching environment.

    In "Drawing a Roadmap: Barriers and Challenges to Designing the Ideal Virtual World for Higher Education," Chris Johnson provides a "roadmap for designing an 'ideal' virtual world for higher education, pointing decision-makers in a general direction for implementing virtual worlds and noting various barriers along the way."

    These and other papers and articles are available online at  http://connect.educause.edu/apps/er/index.asp?time=1222867545

     

    EDUCAUSE Review [ISSN 1527-6619], a bimonthly print magazine that explores developments in information technology and education, is published by EDUCAUSE (http://www.educause.edu/ ). Articles from current and back issues of EDUCAUSE Review are available on the Web at http//www.educause.edu/pub/er /

    See also:
    "B-Schools in Second Life: It's More Than Just Fun and Games; It's the Confluence of Playing, Learning, and Working," By Vivek Bhatnagar, THE SLOAN-C VIEW, vol. 7, no. 8, September 2008 --- http://www.sloanconsortium.org/viewarticle_SL  

     "The Mean Business of Second Life: Teaching Entrepreneurship, Technology and e-Commerce in Immersive Environments," By Brian Mennecke, Lesya M. Hassall, and Janea Triplett, JOURNAL OF ONLINE LEARNING AND TEACHING, vol. 4, no. 3, September 2008 http://jolt.merlot.org/vol4no3/hassall_0908.htm

    JOURNAL OF VIRTUAL WORLDS RESEARCH --- http://jvwresearch.org/  
    This new open access, peer-reviewed publication, hosted by the Texas Digital Library consortium (http://jvwresearch.org/) is a "transdisciplinary journal that engages a wide spectrum of scholarship and welcomes contributions from the many disciplines and approaches that intersect virtual worlds research."
    The theme for volume 2, number 1, to be published in March 2009, will be "Pedagogy, Education and Innovation in 3-D Virtual Worlds."

     

    Bob Jensen’s related threads are at http://www.trinity.edu/rjensen/000aaa/thetools.htm#SecondLife

    ......................................................................

     GAMES AND LEARNING

    The theme of both Fall 2008 issues of COMPUTERS AND COMPOSITION and COMPUTERS AND COMPOSITION ONLINE is "Reading Games: Composition, Literacy, and Video Gaming" -- "a look at the computer and video gaming industry and its influence on our literacy practices. Articles include a variety of interesting topics, from encouraging reflective gaming/play, to adapting games for writing courses, to writing in World of Warcraft, to collaborative writing in Alternate Reality Games, and more." Although the theme is the same for both publications, there is no overlap in their contents.

    Computers and Composition: An International Journal [ISSN: 8755-46150] is a refereed online journal hosted at Ohio State University and "devoted to exploring the use of computers in composition classes, programs, and scholarly projects. It provides teachers and scholars a forum for discussing issues connected to computer use." While all papers are available online only by subscription, your institution may provide access through Elsevier's ScienceDirect eSelect ( http://www.sciencedirect.com/ ); check with your campus library for availability. For more information and to access current and back issues, go to http://computersandcomposition.osu.edu/

    Computers and Composition Online is the companion journal to Computers and Composition. Current and back issues are available at no cost at http://www.bgsu.edu/cconline/

    See also:
    "Teens, Video Games, and Civics," By Amanda Lenhart, et al, September 16, 2008 --- http://www.pewinternet.org/PPF/r/263/report_display.asp

    The Pew Research Center recently reported that "virtually all American teens [97% of teens ages 12-17] play computer, console, or cell phone games and that the gaming experience is rich and varied, with a significant amount of social interaction and potential for civic engagement."

    "The Civic Potential of Video Games," By Civic Engagement Research Group at Mills College, September 7, 2008 --- http://www.civicsurvey.org/White_paper_link_text.pdf

    "Although it shares some text and findings with the Teens, Games, and Civics report, it provides a more detailed discussion of the relevant research on civics and gaming. In addition, this report discusses the policy and research implications of these findings for those interested in better understanding and promoting civic engagement through video games."

    "Literacy through Gaming: The Influence of Videogames on the Writings of High School Freshman Males," By Immaculee Harushimana , JOURNAL OF LITERACY AND TECHNOLOGY, vol. 9, no. 2, August 2008, pp. 35-56 --- http://www.literacyandtechnology.org/volume10/harushimana.pdf  

     "While videogames often evoke concerns among parents, politicians, and educators, they pervade the lives of the youth in today's world and constitute a major component of the 'new literacy studies' field. In an era when young generations are digital-friendly and video game savvy, the role of video gaming in children and adolescents' cognitive development must not be overlooked. Educating today's generation of learners requires an understanding of the new digital environment into which they were born."

     Bob Jensen’s related threads are at http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment

    ......................................................................

     

    DISTANCE LEARNING JOURNAL ARCHIVES NOW ONLINE
    The complete archives (1986-2008) of THE JOURNAL OF DISTANCE EDUCATION are now online and searchable at http://www.jofde.ca/  
    Papers in the current issue include:

    "Disciplinary Differences in E-learning Instructional Design, " By Glenn Gordon Smith, Ana T. Torres-Ayala, and Allen J. Heindel

    "Teacher and Student Behaviors in Face-to-Face and Online Courses:  Dealing With Complex Concepts, " By C. E. (Betty) Cragg, Jean Dunning, and Jaqueline Ellis

    "The Effect of Peer Collaboration and Collaborative Learning on Self-efficacy and Persistence in a Learner-paced Continuous Intake Model," By Bruno Poellhuber, Martine Chomienne, Thierry Karsenti, The Journal of Distance Education [ISSN: 1916-6818 (online), ISSN: 0830-0445 (print)] is an "international publication of the Canadian Network for Innovation in Education (CNIE) [that] aims to promote and encourage Canadian scholarly work in distance education and provide a forum for the dissemination of international scholarship." For more information, contact: British Columbia Institute of Technology, Learning & Teaching Centre, 3700 Willingdon Ave., Burnaby, BC, Canada V5G 3H2; tel: 604-454-2280; fax: 604-431-7267; email: journalofde@gmail.com ; Web: http://www.jofde.ca/  

    ......................................................................

     CAROLINA CONVERSATIONS

    Carolina Conversations, launched in September 2008, is a series of live interviews with members of the UNC-Chapel Hill community conducted in the virtual world, Second Life. Guests will discuss their work and interests and will also respond to questions from the Second Life audience attending in-world. The next interview will be on October 7, 2008. For more information, to get the SLurl, or to view videos of past conversations, go to http://its.unc.edu/tl/conversations/

    Carolina Conversations is sponsored by UNC-Chapel Hill Information Technology Services' Teaching and Learning division, the group that publishes TL INFOBITS.

    ......................................................................

     

    RECOMMENDED READING
    "Recommended Reading" lists items that have been recommended to me or that Infobits readers have found particularly interesting and/or useful, including books, articles, and websites published by Infobits subscribers. Send your recommendations to carolyn_kotlas@unc.edu for possible inclusion in this column.

    "Is Stupid Making Us Google?"  By James Bowman, The New Atlantis, no. 21, Summer 2008, pp. 75-80 ---
    http://www.thenewatlantis.com/publications/is-stupid-making-us-google

     "Generally speaking, even those who are most gung-ho about new ways of learning probably tend to cling to a belief that education has, or ought to have, at least something to do with making things lodge in the minds of students--this even though the disparagement of the role of memory in education by professional educators now goes back at least three generations, long before computers were ever thought of as educational tools. That, by the way, should lessen our astonishment, if not our dismay, at the extent to which the educational establishment, instead of viewing these developments with alarm, is adapting its understanding of what education is to the new realities of how the new generation of 'netizens' actually learn (and don't learn) rather than trying to adapt the kids to unchanging standards of scholarship and learning."

     Editor's note: The article "Is Google Making Us Stupid?" mentioned in Bowman's article was the June 2008 Infobits "Recommended Reading" suggestion (http://its.unc.edu/tl/infobits/bitjun08.php#7 ).


    "Is Stupid Making Us Google?"  By James Bowman, The New Atlantis, no. 21, Summer 2008, pp. 75-80 ---
    http://www.thenewatlantis.com/publications/is-stupid-making-us-google

    Generally speaking, even those who are most gung-ho about new ways of learning probably tend to cling to a belief that education has, or ought to have, at least something to do with making things lodge in the minds of students--this even though the disparagement of the role of memory in education by professional educators now goes back at least three generations, long before computers were ever thought of as educational tools. That, by the way, should lessen our astonishment, if not our dismay, at the extent to which the educational establishment, instead of viewing these developments with alarm, is adapting its understanding of what education is to the new realities of how the new generation of 'netizens' actually learn (and don't learn) rather than trying to adapt the kids to unchanging standards of scholarship and learning.

    A prominent librarian utters dire warnings about new media
    "Mass Culture 2.0," by Scott McLemee, Inside Higher Ed, June 20, 2007 --- http://www.insidehighered.com/views/2007/06/20/mclemee

     

    Jensen Comment
    Yikes! When I'm looking for an answer to most anything I now turn first to Wikipedia and then Google. I guess James Bowman put me in my place. However, being retired I'm no longer corrupting the minds of students (at least not apart from my Website and blogs --- http://www.trinity.edu/rjensen/threads.htm
    I would counter Bowman by saying that Stupid is as Stupid does. Stupid "does" the following:  Stupid accepts a single source for an answer. Except when the answer seems self evident, a scholar will seek verification from other references. However, a lot of things are "self evident" to Stupid.

    Scholars often forget that Google also has a scholars' search engine --- http://www.trinity.edu/rjensen/searchh.htm#ScholarySearch
    For example enter the search term "bailout."
    How experts/scholars search the Web are at http://www.trinity.edu/rjensen/Searchh.htm#Scholars


    Also see "Google, Yahoo, Wikipedia, Open Encyclopedia, and YouTube as Knowledge Bases" --- http://www.trinity.edu/rjensen/searchh.htm#KnowledgeBases

    There is a serious issue that sweat accompanied with answer searching aids in the memory of what is learned --- http://www.trinity.edu/rjensen/265wp.htm
    But must we sweat to find every answer in life? There is also the maxim that we learn best from our mistakes. Bloggers are constantly being made aware of their mistakes. This is one of the scholarly benefits of blogging --- http://www.trinity.edu/rjensen/ListservRoles.htm


    "100 Incredibly Useful and Interesting Web Sites," by Mark Sullivan, PC World via The Washington Post, October 4, 2008 ---
    http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100200090.html?wpisrc=newsletter

    "7 Great Sites About Music and Literature," by Mark Sullivan, PC World via The Washington Post, October 4, 2008 ---
    http://www.washingtonpost.com/wp-dyn/content/article/2008/10/02/AR2008100203242.html?wpisrc=newsletter


    From the Scout Report on October 3, 2008

    Anti-Malware 1.28 --- http://www.malwarebytes.org/products.php 

    Anti-malware programs aren't uncommon in the least, but ones that are both effective and free are rare. This latest release of Malwarebytes' Anti- Malware application offers a quick scan that takes a bit under 10 minutes and it supports multiple drive scanning and a scan-on-demand feature for individual files. This version can be used for free, but real-time protection is only available for the paid version. This application is compatible with computers running Windows NT and newer.  


    Rockbox Utility 1.0.7  --- http://www.rockbox.org/twiki/bin/view/Main/ReleaseNotes30 

    Those persons looking for an open source replacement firmware for a wide range of portable digital audio players need look no further than this latest release of the Rockbox Utility. It supports a wide range of popular models (including various iPods) and visitors are welcome to customize it as they see fit. This version is compatible with all operating systems.

    From the Scout Project on October 10, 2008

    Download Accelerator Plus 8.7.05 --- http://www.speedbit.com/ 

    The sine qua non of this program is a deep and abiding commitment to faster and more responsive download times. It certainly delivers, as it effectively splits large files into smaller pieces, along with actively searching for mirror sites along the way. Additionally, the application can also preview some media files while downloading. This latest version of Download Accelerator Plus is compatible with computers running Windows 98 and newer.


    Art Text 2.0.1 --- http://www.belightsoft.com/products/arttext/overview.php 

    If you're looking for a tool to jazz up designs for a new website, this helpful application will come in handy. With Art Text, users can customize existing designs, draw on a variety of pre-formatted graphics, and also browse through fifty different creative fonts. It should be mentioned that this is a free trial version, and visitors who wish to use the complete version of Art Text will need to pay $39.95. This version is compatible with computers running Mac OS X 10.4 and newer.

     


    Free online textbooks, cases, and tutorials in accounting, finance, economics, and statistics --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks


    Personal Finance and Retirement Planning Tutorials

    Center for Retirement Research at Boston College --- http://crr.bc.edu/
    (This has been updated for retirement planning in the wake of the sub-prime meltdown.)

    Bob Jensen's personal finance helpers are at http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers


    Education Tutorials

    Bob Jensen's threads on general education tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#EducationResearch


    Engineering, Science, and Medicine Tutorials

    National Science Foundation: Discoveries --- http://www.nsf.gov/discoveries/

    The Digestive System http://www.vivo.colostate.edu/hbooks/pathphys/digestion/index.html

    History of Media Technology --- http://www.cedmagic.com/history/

    NOVA: Sputnik Declassified --- http://www.pbs.org/wgbh/nova/sputnik/

    50th Anniversary of NASA --- http://www.nasa.gov/externalflash/50th/

    From the Scout Report on October 3, 2008

    After its first half-century, NASA celebrates and considers the future of its work Voice of America: NASA, Probing the Solar System for 50 Years [Windows Media Player] http://www.voanews.com/english/2008-10-01-voa22.cfm 

    Two halves of NASA merge at half-century http://www.msnbc.msn.com/id/26948872/ 

    NASA at 50: Johnson Space Center being put to the test http://www.chron.com/disp/story.mpl/headline/metro/6028850.html 

    50 Years in Space: NASA's Roadmap to 2058 http://www.space.com/news/081001-nasa50-road-ahead.html 

    The Hubble Space Telescope [Real Player, Macromedia Flash Player] http://hubble.nasa.gov/ 

    NASA Human Space Flight [Macromedia Flash Player, pdf] http://spaceflight.nasa.gov/home/index.html

     

    Bob Jensen's threads on free online science, engineering, and medicine tutorials are at --- http://www.trinity.edu/rjensen/Bookbob2.htm#Science


    Social Science and Economics Tutorials

    Medieval Imaginations: Literature and Visual Culture in the Middle Ages --- http://med-imag.english.cam.ac.uk/

    Berkley Center for Religion, Peace, and World Affairs --- http://berkleycenter.georgetown.edu

    Artists in the Workforce, 1990-2005 --- http://www.nea.gov/research/ArtistsInWorkforce.pdf

    Bob Jensen's threads on Economics, Anthropology, Social Sciences, and Philosophy tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#Social

    Pueblo, USA: How Latino Immigration is Changing America --- http://americanradioworks.publicradio.org/features/immigration/

    Next America --- http://nextamerica.csis.org/

    Debating Our Destiny --- http://www.pbs.org/newshour/debatingourdestiny/index.html


    Law and Legal Studies

    MAA Minute Math --- http://maaminutemath.blogspot.com/

    MAA NumberADay (mathematics) --- http://maanumberaday.blogspot.com/

    Bob Jensen's threads on law and legal studies are at http://www.trinity.edu/rjensen/Bookbob2.htm#Law


    Math Tutorials

    Bob Jensen's threads on free online mathematics tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#050421Mathematics


    History Tutorials

    History of Media Technology --- http://www.cedmagic.com/history/

    Medieval Imaginations: Literature and Visual Culture in the Middle Ages --- http://med-imag.english.cam.ac.uk/

    Creating the United States --- http://myloc.gov/exhibitions/creatingtheus/Pages/default.aspx

    The Woodrow Wilson Presidential Library --- http://www.woodrowwilson.org/

    Library of Congress Search Site for Art, Speeches, Music, and Other Items --- http://catalog.loc.gov/

    Next America --- http://nextamerica.csis.org/

    University of Wyoming Digital Collections --- http://digital.uwyo.edu

    National Geographic: History --- http://www.nationalgeographic.com/history/

    NOVA: Sputnik Declassified --- http://www.pbs.org/wgbh/nova/sputnik/

    50th Anniversary of NASA --- http://www.nasa.gov/externalflash/50th/

    Bob Jensen's threads on history tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#History
    Also see http://www.trinity.edu/rjensen/ElectronicLiterature.htm  


    Language Tutorials

    Bob Jensen's links to language tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#Languages


    Music History and Tutorials

    Didaskalia --- http://www.didaskalia.net/

    The Leonard Bernstein Collection --- http://memory.loc.gov/ammem/collections/bernstein/

    History of Media Technology --- http://www.cedmagic.com/history/

    Bob Jensen's threads on music tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#050421Music


    Writing Tutorials

    Amherst College: Online Resources for Writers --- https://www.amherst.edu/academiclife/support/writingcenter/resourcesforwriters

    Bob Jensen's helpers for writers are at http://www.trinity.edu/rjensen/Bookbob3.htm#Dictionaries


    Updates from WebMD --- http://www.webmd.com/

     


    "Vegan Diet Good for Type 2 Diabetes:  Vegan Diet Beats ADA-Recommended Diet in Lowering Heart Disease Risk," by Caroline Wilbert, WebMD, October 1, 2008 --- http://diabetes.webmd.com/news/20081001/vegan-diet-good-type-2-diabetes

    A vegan diet may do a better job of reducing cardiovascular disease in diabetic patients than a diet recommended by the American Diabetes Association (ADA), according to a new study.

    Two out of three people with diabetes die of a heart attack or stroke, so reducing cardiovascular disease is a priority. The study was in part funded by the Physicians Committee for Responsible Medicine, which promotes a vegan diet.

    For 22 weeks, participants followed either a low-fat, low-glycemic vegan diet or guidelines prescribed by the ADA. All 99 participants had type 2 diabetes. Both men and women participated and were recruited through a newspaper ad in the Washington, D.C., area.

    Participants reported what they ate at the start of the trial and throughout the trial. Researchers took the data and calculated scores based on the Alternate Healthy Eating Index (AHEI). Scores were calculated at the beginning of the 22 weeks and again at the end. There was no difference in the scores between the two groups at the start of the study.

    Past research has shown a correlation between AHEI and cardiovascular disease. The AHEI is a nine-component dietary index used to rate foods and macronutrients related to chronic disease risk. The higher the AHEI score, the lower the risk of cardiovascular disease. The vegan dieters saw significant improvements in their AHEI scores; the ADA group did not.

    The vegan group improved significantly in every AHEI category, including increased intake of vegetables, fruits, nut and soy protein, and cereal fiber, and a decrease in trans fat intake.

    Both groups were able to reduce their weight and their hemoglobin A1c, a measure of blood sugar levels over a prolonged period of time. However, the vegan group experienced more significant reductions in both categories.

    "The results of this study suggest that, if followed for the long-term, a low-fat vegan diet may be associated with a reduced risk of major chronic diseases, particularly cardiovascular disease," the study concludes.

    Neither diet resulted in adequate intake of vitamins D or E, or of calcium. Patients attempting to follow either eating plan should consult with their doctor and make sure they are getting adequate amounts of these nutrients.

    Jensen Comment
    Remember scotch whiskey is made from barley, and barley is a pretty nutritious and wholesome grain. But I don't see mention of scotch whiskey in any vegan diet. Sigh!




    Forwarded by Maureen

    I just want to thank all of you for your educational emails over the past year..

    There's no way to save my grandchildren from being street beggars in Rio --- http://www.trinity.edu/rjensen/2008Bailout.htm#NationalDebt

    Thanks to you, I no longer open a public bathroom door without using a paper towel.

    I can't use the remote in a hotel room because I don't know what the last person was doing while flipping through the adult movie channels.

    I can't sit down on the hotel bedspread because I can only imagine what has happened on it since it was last washed.

    I can't enjoy lemon slices in my tea or on my seafood anymore because lemon peels have been found to contain all kinds of nasty germs including feces.

    I have trouble shaking hands with someone who has been driving because the number one pass-time while driving alone is picking your nose (although cell phone usage may be taking the number one spot)

    Eating a Little Debbie sends me on a guilt trip because I can only imagine how many gallons of trans fats I have consumed over the years.

    I can't touch any woman's purse for fear she has placed it on the floor of a public bathroom. Yuck!

    I must send my special thanks to whoever sent me the one about poop in the glue on envelopes because I now have to use a wet sponge with every envelope that needs sealing.

    Also, now I have to scrub the top of every can I open for the same reason.

    I no longer have any savings because I gave it to a sick girl (Penny Brown) who is about to die in the hospital for the 1,387,258th time.

    I no longer have any money at all, but that will change once I receive the $15,000 that Bill Gates/Microsoft and AOL are sending me for participating in their special e-mail program.

    I no longer worry about my soul because I have 363,214 angels looking out for me, and St. Theresa's novena has granted my every wish. ; I no longer eat KFC because their chickens are actually horrible mutant freaks with no eyes or feathers.

    I no longer use cancer-causing deodorants even though I smell like a water buffalo on a hot day.

    Thanks to you, I have learned that my prayers only get answered if I forward an email to seven of my friends and make a wish within five minutes.

    Because of your concern I no longer drink Coca Cola because it can remove toilet stains.

    I no longer can buy gasoline without taking someone along to watch the car so a serial killer won't crawl in my back seat when I'm pumping gas..

    I no longer drink Pepsi or Dr Pepper since the people who make these products are atheists who refuse to put 'Under God' on their cans.

    I no longer use Saran wrap in the microwave because it causes cancer.

    And thanks for letting me know I can't boil a cup of water in the microwave anymore because it will blow up in my face...disfiguring me for life. ; I no longer check the coin return on pay phones because I could be pricked with a needle infected with AIDS.

    I no longer go to shopping mall s because someone will drug me with a perfume sample and rob me.

    I no longer receive packages from UPS or FedEx since they are actually Al Qaeda in disguise.

    I no longer shop at Target since they are French and don't support our American troops or the Salvation Army.

    I no longer answer the phone because someone will ask me to dial a number for which I will get a phone bill with calls to Jamaica , Uganda & Singapore and Uzbekistan .

    I no longer buy expensive cookies from Neiman Marcus since I now have their recipe.

    Thanks to you, I can't use anyone's toilet but mine because a big brown African spider is lurking under the seat to cause me instant death when it bites my butt.

    And thanks to your great advice, I can't ever pick up $5.00 dropped in the parking lot because it probably was placed there by a sex molester waiting underneath my car to grab my leg.

    I can no longer drive my car because I can't buy gas from certain gas companies!

    If you don't send this e-mail to at least 144,000 people in the next 70 minutes, a large dove with diarrhea will land on your head at 5:00 PM this afternoon and the fleas from 12 camels will infest your back, causing you to grow a hairy hump. I know this will occur because it actually happened to a friend of my next door neighbor's ex-mother-in-law's second husband's cousin's beautician...

    Have a wonderful day...

    Oh, by the way..... A German scientist from Argentina , after a lengthy study, has discovered that people with insufficient brain activity read their e-mail with their hand on the mouse.

    Don't bother taking it off now, it's too late.


    Forwarded by Paula

    How to tell if you've been married too long.....

    Three women: one engaged, one married, and one a mistress, are chatting about their relationships and decided to amaze their men by surprising them wearing black leather bras, stiletto heels and a mask. After a few days they meet up for lunch and compare notes...

    The engaged woman: The other night when my boyfriend came over he found me with a black leather bodice, stilettos and a mask. He saw me and said, "You are the woman of my life. I love you." Then we made love all night long.

    The mistress: Me too! The other night I met my lover at his office and I was wearing the leather bodice, heels, mask over my eyes and a raincoat. When I opened the raincoat he didn't say a word, but we had wild sex all night.

    The married woman: When my husband came home I was wearing the leather bodice, black stockings, stilettos and a mask over my eyes. As soon as he came in the door and saw me he said,

    "What's for dinner, Batman?"


    Forwarded by Auntie Bev

    BATTER UP

    Two 90-year-old women, Rose and Barb, had been friends all of their lives.

    When it was clear that Rose was dying, Barb visited her every day.

    One day Barb said, 'Rose, we both loved playing women's softball all our lives, and we played all through High School. Please do me one favor: when you get to Heaven, somehow you must let me know if there's women's soft-ball there.'

    Rose looked up at Barb from her death bed and said, 'Barb, you've been my best friend for many years. If it's at all possible, I'll do this favor for you.'

    Shortly after that, Rose passed on.

    At midnight the following Friday, Barb was awakened from a sound sleep by a blinding flash of white light and a voice calling out to her, 'Barb, Barb.'

    'Who is it?' asked Barb, sitting up suddenly. 'Who is it?' 'Barb -- it's me, Rose.'

    'You're not Rose. Rose just died.' 'I'm telling you , it's me, Rose,' insisted the voice.

    'Rose! Where are you?' 'In Heaven,' replied Rose. 'I have some really good news and a little bad news.'

    'Tell me the good news first,' said Barb. The good news,' Rose said, 'is that there's Softball in Heaven. Better yet , all of our old buddies who died before us are here, too. Better than that, we're all young again.

    Better still, it's always springtime, and it never rains or snows. And best of all, we can play softball all we want, and we never get tired.'

    'That's fantastic,' said Barb. 'It's beyond my wildest dreams! So what's the bad news'

    'You're scheduled to pitch on Tuesday.'





    Tidbits Archives --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm

    Click here to search Bob Jensen's web site if you have key words to enter --- Search Site.
    For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/

    World Clock --- http://www.peterussell.com/Odds/WorldClock.php
    Facts about the earth in real time --- http://www.worldometers.info/

    Interesting Online Clock and Calendar --- http://home.tiscali.nl/annejan/swf/timeline.swf
    Time by Time Zones --- http://timeticker.com/
    Projected Population Growth (it's out of control) --- http://geography.about.com/od/obtainpopulationdata/a/worldpopulation.htm
             Also see http://users.rcn.com/jkimball.ma.ultranet/BiologyPages/P/Populations.html
            
    Facts about population growth (video) --- http://www.youtube.com/watch?v=pMcfrLYDm2U
    Projected U.S. Population Growth --- http://www.carryingcapacity.org/projections75.html
    Real time meter of the U.S. cost of the war in Iraq --- http://www.costofwar.com/ 
    Enter you zip code to get Census Bureau comparisons --- http://zipskinny.com/
    Sure wish there'd be a little good news today.

    Three Finance Blogs

    Jim Mahar's FinanceProfessor Blog --- http://financeprofessorblog.blogspot.com/
    FinancialRounds Blog --- http://financialrounds.blogspot.com/
    Karen Alpert's FinancialMusings (Australia) --- http://financemusings.blogspot.com/

    Some Accounting Blogs

    Paul Pacter's IAS Plus (International Accounting) --- http://www.iasplus.com/index.htm
    International Association of Accountants News --- http://www.aia.org.uk/
    AccountingEducation.com and Double Entries --- http://www.accountingeducation.com/
    Gerald Trite's eBusiness and XBRL Blogs --- http://www.zorba.ca/
    AccountingWeb --- http://www.accountingweb.com/   
    SmartPros --- http://www.smartpros.com/

    Bob Jensen's Sort-of Blogs --- http://www.trinity.edu/rjensen/JensenBlogs.htm
    Current and past editions of my newsletter called New Bookmarks --- http://www.trinity.edu/rjensen/bookurl.htm
    Current and past editions of my newsletter called Tidbits --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm
    Current and past editions of my newsletter called Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

    Online Books, Poems, References, and Other Literature
    In the past I've provided links to various types electronic literature available free on the Web. 
    I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm

    Shared Open Courseware (OCW) from Around the World: OKI, MIT, Rice, Berkeley, Yale, and Other Sharing Universities --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

    Free Textbooks and Cases --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks

    Free Mathematics and Statistics Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#050421Mathematics

    Free Science and Medicine Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#Science

    Free Social Science and Philosophy Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#Social

    Free Education Discipline Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm

    Teaching Materials (especially video) from PBS

    Teacher Source:  Arts and Literature --- http://www.pbs.org/teachersource/arts_lit.htm

    Teacher Source:  Health & Fitness --- http://www.pbs.org/teachersource/health.htm

    Teacher Source: Math --- http://www.pbs.org/teachersource/math.htm

    Teacher Source:  Science --- http://www.pbs.org/teachersource/sci_tech.htm

    Teacher Source:  PreK2 --- http://www.pbs.org/teachersource/prek2.htm

    Teacher Source:  Library Media ---  http://www.pbs.org/teachersource/library.htm

    Free Education and Research Videos from Harvard University --- http://athome.harvard.edu/archive/archive.asp

    VYOM eBooks Directory --- http://www.vyomebooks.com/

    From Princeton Online
    The Incredible Art Department --- http://www.princetonol.com/groups/iad/

    Online Mathematics Textbooks --- http://www.math.gatech.edu/~cain/textbooks/onlinebooks.html 

    National Library of Virtual Manipulatives --- http://enlvm.usu.edu/ma/nav/doc/intro.jsp

    Moodle  --- http://moodle.org/ 

    The word moodle is an acronym for "modular object-oriented dynamic learning environment", which is quite a mouthful. The Scout Report stated the following about Moodle 1.7. It is a tremendously helpful opens-source e-learning platform. With Moodle, educators can create a wide range of online courses with features that include forums, quizzes, blogs, wikis, chat rooms, and surveys. On the Moodle website, visitors can also learn about other features and read about recent updates to the program. This application is compatible with computers running Windows 98 and newer or Mac OS X and newer.

    Some of Bob Jensen's Tutorials

    Accountancy Discussion ListServs:

    For an elaboration on the reasons you should join a ListServ (usually for free) go to   http://www.trinity.edu/rjensen/ListServRoles.htm
    AECM (Educators)  http://pacioli.loyola.edu/aecm/ 
    AECM is an email Listserv list which provides a forum for discussions of all hardware and software which can be useful in any way for accounting education at the college/university level. Hardware includes all platforms and peripherals. Software includes spreadsheets, practice sets, multimedia authoring and presentation packages, data base programs, tax packages, World Wide Web applications, etc

    Roles of a ListServ --- http://www.trinity.edu/rjensen/ListServRoles.htm
     

    CPAS-L (Practitioners) http://pacioli.loyola.edu/cpas-l/ 
    CPAS-L provides a forum for discussions of all aspects of the practice of accounting. It provides an unmoderated environment where issues, questions, comments, ideas, etc. related to accounting can be freely discussed. Members are welcome to take an active role by posting to CPAS-L or an inactive role by just monitoring the list. You qualify for a free subscription if you are either a CPA or a professional accountant in public accounting, private industry, government or education. Others will be denied access.
    Yahoo (Practitioners)  http://groups.yahoo.com/group/xyztalk
    This forum is for CPAs to discuss the activities of the AICPA. This can be anything  from the CPA2BIZ portal to the XYZ initiative or anything else that relates to the AICPA.
    AccountantsWorld  http://accountantsworld.com/forums/default.asp?scope=1 
    This site hosts various discussion groups on such topics as accounting software, consulting, financial planning, fixed assets, payroll, human resources, profit on the Internet, and taxation.
    Business Valuation Group BusValGroup-subscribe@topica.com 
    This discussion group is headed by Randy Schostag [RSchostag@BUSVALGROUP.COM

    Many useful accounting sites (scroll down) --- http://www.iasplus.com/links/links.htm

     

    Professor Robert E. Jensen (Bob) http://www.trinity.edu/rjensen
    190 Sunset Hill Road
    Sugar Hill, NH 03586
    Phone:  603-823-8482 
    Email:  rjensen@trinity.edu