A Primer on Derivatives

I think there are two CBS Sixty Minutes television modules by Steve Kroft that the entire world should view. These are great videos for college students to view while keeping in mind that both videos are negatively biased. What follows is my primer in defense of derivative financial instruments and hedging activities.

CBS Video Module 1
Financial Derivatives Scandals Explode in 1995



CBS Video Module 2
Credit Derivatives Scandals Explode in 2008
  •  Steve Kroft on Sixty Minutes, October 26, 2008 ---
    Introductory Segment if Credit Default Swaps --- http://www.cbsnews.com/video/watch/?id=4501762n%3fsource=search_video
    This video features my hero, Frank Partnoy, who has a great set of books on derivatives scandals (he was once a crook). Frank Partnoy's Senate testimony is the probably the best explanation of how Enron cheated with derivatives --- http://www.trinity.edu/rjensen/FraudEnronQuiz.htm#16
    The Year 2000 controversial law referred to in the video is the Commodity Futures Modernization Act of 2000 --- http://en.wikipedia.org/wiki/Commodities_Futures_Modernization_Act
    Also see http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1682
  • Examples of derivative contracts that even the professional analysts could not decipher  and a history of derivatives contracting scandals --- http://www.trinity.edu/rjensen/fraud.htm#DerivativesFraud 
  • A Great Slide Show on Credit Derivatives --- http://www.isda.org/c_and_a/ppt/PRMIAISDAFinal.ppt#261,10,Modelling Legal Risk?
    Or view the HTML version --- Click Here
  • Frank Partnoy is best known as a whistle blower at Goldman Sachs who blew the lid on the financial graft and sexual degeneracy of derivatives instruments traders and analysts who ripped the public off for billions of dollars and contributed to mind-boggling worldwide frauds.  He is a Yale University Law School graduate who shocked the world with various books  (somewhat repetitive) including the following:
    • FIASCO: The Inside Story of a Wall Street Trader
    • FIASCO: Blood in the Water on Wall Street
    • FIASCO:  Blut an den weißen Westen der Wall Street Broker.
    • FIASCO: Guns, Booze and Bloodlust: the Truth About High Finance
    • Infectious Greed : How Deceit and Risk Corrupted the Financial Markets
    • Codicia Contagiosa

    His other publications include the following highlight:

    "The Siskel and Ebert of Financial Matters: Two Thumbs Down for the Credit Reporting Agencies" (Washington University Law Quarterly)



Related to the above television programs is "The Trillion Dollar Bet" video from PBS Nova --- http://www.trinity.edu/rjensen/2008Bailout.htm#LTCM

Bob Jensen's Primer on Derivatives
Although the roots of the sub-prime mortgage scandal lie in Main Street lending or more money for housing than borrowers could ever afford to pay off, the opportunity to do so was afforded by lenders like Countrywide Financial (a mortgage lending company owned by Bank of America) being able to pass on the default risk by selling the high risk mortgages to Fannie Mae and Freddie Mac, quasi government corporations that took the brunt of the loan losses. But some banks like Washington Mutual (WaMu became the largest bank failure in the history of the world) were greedy and kept huge portfolios of these high-return and high-risk mortgage investments.

Fannie, Freddie, WaMu and the other risk takers assumed that the value of the real estate (the mortgage loan collateral) would be sufficient to pay back the loans in case of mortgage default foreclosures. But they underestimated the fraud going on on Main Street where property appraisers were fraudulently estimating real estate values way above market value and mortgage companies were lending way above amounts that borrowers would ever be able to pay back. My essay on the sub-prime mortgage scandal along with an alphabet soup set of appendices can be found at http://www.trinity.edu/rjensen/2008Bailout.htm

In addition much of the current scandal also is attributed to Wall Street writing of credit derivative contracts that essentially "insured" against default of debt with counterparties investing in debt instruments that were "insured" by credit derivatives written by such giant firms as Bear Stearns and American Insurance Group (AIG). But unlike insurance where sufficient capital reserves are required, Congress passed legislation in Year 2000 that allowed Wall Street to write credit derivative insurance without having any capital reserves to cover the losses. Congress and the Wall Street firms just never anticipated the massive amount of mortgage defaults attributable to Main Street's lending frauds. When the magnitude of the amounts owing to counterparties on credit derivatives became known, giant firms like Bear Stearns and AIG would've defaulted due to credit derivative obligations to counterparties. This would have led, in turn,  to counterparty failure of many giants in the world banking system. The Federal Reserve decided early on to bail out Bear Stearns credit derivative losses, and the first $70 billion given to AIG by Hank Paulsen in the new Bailout Bill went to pay off AIG's counterparties to AIG's credit derivative contracts --- http://www.trinity.edu/rjensen/2008Bailout.htm#SEC

So what is a derivative financial instrument? Consider first a financial debt instrument that historically was a contract in which a borrower borrowed money from a lender and the risk for the entire notional (the loan principal) passed from borrower to lender. For example, if Company B sold bonds for $100 million to Company C, the entire notional ($100 million) is at risk of being paid back to Company B. Credit rating companies, in turn, rate those bonds as to financial risk with such ratings as AAA (virtually certain to be paid back) all the way down to junk bonds (very high risk of default) of the entire notional amount. Credit ratings greatly impact the price received by Company B for its bond sales.

A derivative financial instrument is similar except that the notional amount is often not at risk because these contracts "net settle." For example, if Airline A enters into futures contracts to buy a million gallons of jet fuel one year from now at a forward price of $4 per gallon, the notional full value of a million gallons of fuel never changes hands. After a year passes, Airline A net settles with the counterparties on the net difference between the current spot price and the contracted forward price. Although in some cases a purchase/sale contract can specify physical delivery of the notional, most derivative contracts net settle without putting the entire notional amount at risk.

Hence, a derivative financial instrument has a notional (a quantity such a a million bushels of corn), an underlying (such as the market price of a particular grade of corn), and net settlement provisions that do not put the value of the entire notional amount at risk. Only the difference between forward and spot prices on the notional is at risk. The entire notional becomes at risk only if the future spot prices fall to zero or nearly zero. This is not likely to happen in the case of commodities like corn, oil, copper, gold, silver, etc. It can happen in the case of credit ratings where $100 million in AAA bonds fall to zero when the debtor is declared to be hopelessly bankrupt. This is why credit derivatives are much more risky than commodity derivatives. If a credit derivative is written on a $100 million bond contract, the entire $100 million might be lost. The probability of losing the entire value of the notional is much greater with credit derivatives than with commodities that are almost certain not to decline to $0 in value.

The underlying is generally called an index. Examples include corn prices, oil prices, interest rates (e.g., Treasury rates or LIBOR rates), and credit ratings (AAA, AAB, BBB, etc.). A huge difference between commodity versus credit derivatives lies in the depth (number of buyers and sellers) and the frequency of trades in the market. For example, in the derivatives markets for corn futures or corn options (puts and calls) there are thousands upon thousands of buyers and sellers and the market prices (e.g., futures, option, and spot prices) change by the minute each trading day. In the case of a credit derivative written on the bond rating by a credit rating agency there is no deep market and the credit rating rarely changes. There is no underlying "market" in the case of a credit derivative. Hence a credit derivative differs fundamentally from a commodity derivative in the depth of the market and the frequency of trading on the market. Its a mistake to lump credit derivatives and commodity derivatives in the same a single type of contracting called derivatives.

By any other name, a credit derivative is an insurance contract where risk of default is not market based but depends upon some disaster just like casualty insurance protects against such disasters as fire, wind, and flood. The entire value of the notional (the entire value of each bond insured for credit risk or each house insured for fire loss) is at risk.

In contrast, a commodity derivative is market based and does not in general put the the entire notional at risk because commodity values are not likely to be wiped out entirely. Commodities may move up and down in value, thereby generating variations in the basis (which is the difference between spot and forward prices), but it would be extremely rare for the a commodity to fall to zero in value. It is much more common for an insured house to be burned down entirely or an insured (with a credit derivative) bond notional to fall into junk bond status.

AIG and Allstate and State Farm are required by insurance laws to have capital reserves to cover a large number of houses burning down at the same time. However, if all insured houses burned down at the same time, insurance companies could not possibly cover all the losses. This is why a single insurance company might refuse to insure more than a certain percentage of houses in a give geographic area. Insurance written above a company's limit is spread to other companies by a process called reinsurance. Insurance companies are subject to regulation that requires capital reserves to cover actuary-determined expected losses and contract clauses that limit risk in case of catastrophes such as nuclear holocaust.

Credit derivative insurers could not write insurance contracts for credit default without capital reserves and other catastrophe clauses until Congress in Year 2000 allowed investment banks like Bear Stearns and insurance underwriters like AIG to enter into credit derivative insurance without capital reserves and catastrophe clauses. The fraudulent sub-prime loan market became a catastrophe in terms of real estate loans covered against default by credit derivatives. Bear Stearns, AIG, and the other credit derivative underwriters had insufficient capital reserves and would've defaulted on their credit derivatives if the U.S. government had not stepped in to cover amounts owed to credit derivative counterparties. The government justified bailing out these obligations by stating that the domino effect would've otherwise brought down the entire banking system. On this I'm a cynic, but that's another matter entirely. History is history at this point.

What is sad today is that derivatives in general are getting a bad name!
Commodity derivatives (including interest rate risk derivatives) are great vehicles for managing financial risk provided the commodities and their derivatives are both traded in deep markets with virtually zero probability that commodity values will fall to zero. Sadly, most people in the world just do not appreciate the importance of maintaining active commodity derivative markets for managing risk.

Ignorant people, especially ignorant members of Congress, may move to ban or severely restrain all derivative markets rather than to merely reclassify credit derivatives as insurance contracts subject to insurance laws. This does not mean, however, that I think that commodity derivative contracting should be more regulated for protection against unscrupulous sellers of derivative contracts. Like my hero Frank Partnoy, I've argued for years that there should be more regulation of sellers of derivative contracts.

I have a detailed history of derivative instrument contract scandals and the evolution of accounting rules (national and international) for derivative contracts at http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds
At each point in the way I've applauded Frank Partnoy's appeal for both expanded use of derivative instruments for managing risk and expanded regulations to stop firms like Merrill Lynch, Morgan Stanley, and other unscrupulous outfits from writing derivatives with built-in financial complexity intended to obscure risk and screw fund investors who did not understand what they were buying into.

Bob Jensen's free tutorials and videos on complex accounting rules for accounting for derivative financial instruments and hedging activities --- http://www.trinity.edu/rjensen/caseans/000index.htm

Bob Jensen's glossary on derivative financial instruments --- http://www.trinity.edu/rjensen/acct5341/speakers/133glosf.htm

If Greenspan Caused the Subprime Real Estate Bubble, Who Caused the Second Bubble That's About to Burst?
Answer:  See http://www.trinity.edu/rjensen/2008Bailout.htm#LiquidityBubble

Bob Jensen's Essay on the Bailout Mess --- http://www.trinity.edu/rjensen/2008Bailout.htm


Tidbits on October 30, 2008
Bob Jensen

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

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

Google Maps Street View --- http://maps.google.com/help/maps/streetview/

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

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

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

Nuclear Deterrence in the Age of Nuclear Terrorism Video
Graham Allison, MIT's Technology Review, November/December 2008 --- http://www.technologyreview.com/video/?vid=95
Graham Allison, a professor of government at Harvard University and the director of the Belfer Center for Science and International Affairs at the Kennedy School of Government, talks about the threat of nuclear terrorism.

Slinky Halftime Basketball at Creighton University in Omaha, Nebraska ---

Zorba Paster on Your Health --- http://www.wpr.org/zorba/

Molecular Movies: A Portal to Cell & Molecular Animation (video) --- http://www.molecularmovies.com/

"Short Videos in Support of Open Access," University of Illinois Issues in Scholarly Communications Blog, October 17, 2008 --- http://www.library.uiuc.edu/blog/scholcomm/
Bob Jensen's threads on open access --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

Wienerschnitzel Commercial ("Gotcha") --- http://www.youtube.com/watch?v=YBsYO0ZAfKE

Video Links (humor) forwarded by Jagdish Gangolly

The Long Johns - George Parr http://www.youtube.com/watch?v=aKxVPrUIpBY 

Credit Crunch http://www.youtube.com/watch?v=DXJtnqXubK0&feature=related 

subprime derivatives http://www.youtube.com/watch?v=0YNyn1XGyWg&feature=related 

America's 10 Most Dangerous Cities (some surprises here) --- http://www.sun-sentinel.com/la-mostdangerouscities-gal,0,5507526.photogallery

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

Pianist Gary Graffman: Left-Handed Miracles (Classical Pianist) --- http://www.npr.org/templates/story/story.php?storyId=95485851

Zithers: Memory And Music In Davenport, Iowa --- http://www.npr.org/templates/story/story.php?storyId=95940918

Great Conversations in Music [multimedia] --- http://lcweb2.loc.gov/diglib/ihas/html/greatconversations/great-home.html

Dead Skunk in the Middle of the Road (this reminds me of my trolling days in’55 Olds Convertible)

Wedding Dance (a repeat, but a good repeat) --- http://www.boreme.com/boreme/funny-2008/evolution-of-wedding-dance-p1.php?nwsltr

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

Photographs and Art

The Charlie Parker site of great historical photographs --- http://tsutpen.blogspot.com/

Caribbean Views: Personal Selections by Mike Phillips [Macromedia Flash Player] http://www.bl.uk/onlinegallery/onlineex/carviewsvirtex/index.html

Belles Images --- http://www.slideshare.net/Nickie/belles-images/

Every Road Leads You to Somewhere --- http://funzu.com/index.php/crazy-pics/every-road-leads-you-somewhere-15102008.html

Ron Slattery's Bighappyfunhouse --- http://www.bighappyfunhouse.com/

92 Creative Photographs --- http://justcreativedesign.com/2008/04/08/creative-photographs/

Slide show of military pictures in The New Yorker --- http://www.newyorker.com/online/2008/09/29/slideshow_080929_platon

Fail Photographs --- http://ajanlo.kapu.hu/pics.php?d=fail

Living in a Garbage Truck --- http://www.itsjustabitoffun.com/date/2007/8/20/

Tarahumara People: National Geographic Magazine http://ngm.nationalgeographic.com/2008/11/tarahumara-people/gorney-text

Le Garde-meuble (France) --- http://www.sil.si.edu/DigitalCollections/Art-Design/garde-meuble/

National Portrait Gallery: Ballyhoo! Posters as Portraiture --- http://www.npg.si.edu/exhibit/ballyhoo/
Face-to-Face blog - Smithsonian National Portrait Gallery --- http://face2face.si.edu/

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

The Literature Network --- http://www.online-literature.com/

Literature Collection --- http://www.literaturecollection.com/

Great Books and Classics --- http://www.grtbooks.com/

Authors Directory and Encyclopedia --- http://authorsdirectory.com/title.shtml

The Anagram Dictionary --- http://www.orchy.com/dictionary/anagrams.htm

One Line Jokes --- http://www.merel.us/Joker/OneLiner_Frame.htm


Therein lies the real trouble. Learning is labor. We're selling the fantasy that technology can change that. It can’t. No technology ever has. Gutenberg’s press only made it easier to print books, not easier to read and understand them.
Peter Berger, "The Land of iPods and Honey," The Irascible Professor, February 26, 2007 ---  at http://irascibleprofessor.com/comments-02-26-07.htm

I wonder whether in the rush to celebrate the virtues of openness and the fun of group learning, we’re forgetting the virtues inherent in learning in private, in reclusive Walden-like settings.
Luke Fernandez, Weber State University as quoted by Josh Fischman, Chronicle of Higher Education July 29, 2008 --- http://chronicle.com/wiredcampus/index.php?id=3202&utm_source=wc&utm_medium=en

The Biggest Scandal in Higher Education
On the other hand, that professor who challenges the student because he or she wants that student to be stronger than he or she now is sends a powerful message of respect to the student. (Why am I even writing such a comment? Isn't this obvious? Unfortunately, no. I write this because I have seen far too many people in charge of universities -- professors, people on staff, administrators -- who could not wrap their minds around this simple concept. Such a stance seemed "tough" to them, not "nice." Such a stance seemed "unfriendly," not "sweet and welcoming." Let's face it: such a stance is no come-on to the weakest prospective students who might well be lured to a university by every appeal that makes the place sound like a resort instead of a boot camp.) The professor who believes in challenging the student says this: you are not nothing, and, beyond that, you can achieve so much more than you already have. You may someday thank me for these challenges I present to you along with my willingness to work to help you succeed in your own right. I know from experience that some students will appreciate that work in the moment, some a decade or two later; some may never appreciate it. But a student's appreciation of the teacher has never been the real issue anyway, nor is it the mark of authentic teaching.
Doyle Wesley Walls, "How Will You Go to College?" The Irascible Professor, October 25, 2008 --- http://irascibleprofessor.com/comments-10-25-08.htm
Bob Jensen's commentary on how teaching evaluations cause grade inflation (the biggest scandal in higher education) --- http://www.trinity.edu/rjensen/HigherEdControversies.htm#GradeInflation

Administrators, at their worst, merely count beans. Are the residence halls full? Is everyone wearing a happy face, accentuating the positive? Professors, at their best, are determined that their students, like Thoreau, should know beans. On occasion, a student will leave a classroom in a huff or even leave the university. No one will be smiling all the time if real work is going on. Plenty of people at the university stand ready to fluff pillows. Only a very few people at a university are hired to fluff those metaphorical pillows; however, when the fluffing of pillows begins to feel like genuine concern for the educational needs of the student, then the university is lopsided, way out of balance. Such misplaced concern can weaken students; it does not prepare students because it fails to make them stronger. Students, think ahead about transforming your life, or forget the idea of a liberal arts university altogether. If what you really want is a country club, then join one; they have alcohol and golf and tennis and swimming and dances, and they cost only a fraction of a liberal arts education. If you really want a university, then come prepared to hear me challenge your attitudes about booze and sports and socializing.
Doyle Wesley Walls, "How Will You Go to College?" The Irascible Professor, October 25, 2008 --- http://irascibleprofessor.com/comments-10-25-08.htm
Bob Jensen's threads on higher education controversies --- http://www.trinity.edu/rjensen/HigherEdControversies.htm

East coast or West coast. Private or Public. Urban or rural. Go to any so-called "best school" the wrong way and you will have gone nowhere -- and wasted valuable money and time and potential.
Doyle Wesley Walls, "How Will You Go to College?" The Irascible Professor, October 25, 2008 --- http://irascibleprofessor.com/comments-10-25-08.htm

“How many professors does it take to change a light bulb?”
“Whadaya mean, “change”?”
Bob Zemsky, Chronicle of Higher Education's Chronicle Review,  December 2007 --- Click Here

Message to America's Higher Education Faculty
You are the reason the colleges are proud of what they do and your accomplishments represent the performance that colleges and universities point to in developing and justifying their reputation. Reputations are not developed in a vacuum. You, your parents, your children, your colleagues and your peers are the living remnants of the college experience. Your success justifies the massive resources poured by private Americans into supporting colleges and universities. And your success validates the vocation that characterizes the role of so many faculty members. There is something special about American higher education, which continues to produce some of the world’s greatest scientists and engineers, thinkers and scholars. There is something unique in the education we offer, which provides a breadth, an intellectual depth to accompany the skills and aptitudes of the specialist. And there are the human successes in sectors whose mission is to produce an involved, thinking efficiency... Not everyone agrees that American higher education is characterized by success. Numbers are quoted indicating that the quality of graduates is not what it used to be. But they forget that sometimes the numbers go down as the numbers go up. As American higher education welcomes people less prepared, less gifted and often less motivated, as the atmosphere at some colleges becomes less rarified by the proliferation of remedial education, the average accomplishment will go down.
Bernard Fryshman, "Grasping the Reins of Reality," Inside Higher Ed, August 16, 2006 --- http://www.insidehighered.com/views/2006/08/16/fryshman

The broad mass of a nation will more easily fall victim to a big lie than to a small one.
Adolph Hitler, Mein Kampf.

For many people, postmodern analysis and semiotics are dirty words, products of a rising barbarian anticulture bent on replacing Edward R. Murrow with the paparazzi. One of the bracing things about old-school postmodernism was the way it provided the tools of Enlightenment critical thinking to anti-Enlightenment folks: Islamists, post-colonial nationalists, psycho feminists, and so on. Deconstruction and anti-Orientalism were essential means for undermining what was perceived as a white male power structure. It was only a matter of time before the white males would start getting in on the action. In the recent reaction of Hollywood conservatives against entertainment liberalism, critical and satirical tools are used to undermine consensus and elevate pre-Enlightenment ideals. David Zucker's comedy An American Carol tries to get yucks by standing up for old-fashioned patriotism, while Ben Stein's flat-earth documentary Expelled posits a conspiracy of evolutionists to keep creationism out of the academy. The message is as clear as a Pluggers cartoon: We, the salt of the earth, are being systematically undermined by the American elites whose monopoly on good thinking is just a cover for self-interest.
Tim Cavanaugh, "Every Man a Derrida:  A nation on the verge of self-deconstructing," Reason Magazine, November 2008 --- http://www.reason.com/news/show/129283.html


"Sympathy for the Devil:  Why is the American left making excuses for Putin's Russia?" by Cathy Young, Reason Magazine, October 24, 2008 --- http://www.reason.com/news/show/129647.html
Also see http://www.reason.com/news/show/129389.html

Russia’s role gets a lot less attention. It deserves more. It too enjoys good political relations with Khartoum. It too has run interference for Sudan in the Security Council. And, as Amnesty International reported last week, Moscow too has an active arms supply relationship with Sudan. This violates Resolutions 1556 and 1591, as documented both by this Amnesty report and by the UN’s own Panel of Experts in its report leaked to the New York Times in late April.
"The EU, Russia and Darfur - Not Even Talking the Talk --- http://www.savedarfur.org/blog/entries/the_eu_russia_and_darfur_not_even_talking_the_talk/

The point here is simple: Trust no one who declares an end to a system as complex and successful as capitalism, or who sees the current crisis as the long-awaited fulfillment of Marx's voodoo economics. It was The Guardian's Simon Jenkins—yes, that Guardian—who first noted that the current meltdown was immediately followed by "journalistic wish-fulfillment and glee," and observed that his fellow "Guardian writers and Labour politicians have been drooling all week over what they call the ‘collapse of the free market model.'" Now that globalization has brought unprecedented wealth to developing countries, and has lifted millions out of poverty, it's time, say the "disaster socialists," to try it our way.
Michael Moynihan, "The Rise of Disaster Socialism:  I've seen the past...and it works," Reason Magazine, October 20, 2008 --- http://www.reason.com/news/show/129535.html

Obama vs. McCain on Health Care --- http://www.accountingweb.com/cgi-bin/item.cgi?id=106210

Business Owner Reasons for Concern --- http://www.accountingweb.com/cgi-bin/item.cgi?id=106228

Credit rating agencies gave AAA ratings to mortgage-backed securities that didn't deserve them. "These ratings not only gave false comfort to investors, but also skewed the computer risk models and regulatory capital computations," Cox said in written testimony.
SEC Chairman Christopher Cox as quoted on October 23, 2008 at http://www.nytimes.com/external/idg/2008/10/23/23idg-Greenspan-Bad.html
Also see "Triple-A Trouble," by Justin Fox, Time Magazine, March 24, 2008, Page 32 --- http://www.time.com/time/magazine/article/0,9171,1722275,00.html
Bob Jensen's threads on the bad deeds of credit rating agencies are at http://www.trinity.edu/rjensen/FraudRotten.htm#CreditRatingAgencies

As officials worldwide scrambled to contain the spreading financial virus, hopes are rising that the latest government plans to purchase equity stakes in banks may finally offer the right medicine. And with the patient showing intermittent signs of improving, thoughts turn towards next steps, including new restrictions on the markets. In addition, expect individuals and business to have a tougher time getting loans for years -- not just months. And watch for authorities to prescribe greater transparency, stricter capital requirements to reduce leveraging, and more standardized financial contracts to push opaque securities into the sunlight.
"How the Credit Crisis Could Forge a New Economic Order," University of Pennsylvania's Knowledge@Wharton , October 15-28 ---

Again the media showed their incredible bias by giving scattered coverage of Biden's statements (on the high likelihood of a dire military crisis in early 2009). There were a few exceptions. On MSNBC's "Morning Joe," co-host Mika Brzezinski flipped incredulously through the papers, expressing shock at the lack of coverage of Biden's remarks. Guest Dan Rather admitted that if Palin had said it, the media would be going nuts . . . Yet, when Biden asserted incorrectly in the vice-presidential debate that the United States "drove Hezbollah out of Lebanon," nobody in the US media shrieked. (It was, however, covered with derision in the Middle East.) Or when he confused his history by claiming FDR calmed the nation during the Depression by going on TV, the press didn't take it as evidence that he's clueless . . . Lucky for him, his name isn't Dan Quayle, or that would have followed him for the rest of his career.
"BIDEN'S BUNGLES: A BLATANT (MEDIA) BIAS," The New York Post, October 22. 2008 --- Click Here

Now we know: 95% of Americans will get a "tax cut" under Barack Obama after all. Those on the receiving end of a check will include the estimated 44% of Americans who will owe no federal income taxes under his plan. Now we know: 95% of Americans will get a "tax cut" under Barack Obama after all. Those on the receiving end of a check will include the estimated 44% of Americans who will owe no federal income taxes under his plan. In most parts of America, getting money back on taxes you haven't paid sounds a lot like welfare. Ah, say the Obama people, you forget: Even those who pay no income taxes pay payroll taxes for Social Security. Under the Obama plan, they say, these Americans would get an income tax credit up to $500 based on what they are paying into Social Security. Just two little questions: If people are going to get a tax refund based on what they pay into Social Security, then we're not really talking about income tax relief, are we? And if what we're really talking about is payroll tax relief, doesn't that mean billions of dollars in lost revenue for a Social Security trust fund that is already badly underfinanced?
William McGurn, "Obama Talks Nonsense on Tax Cuts:  Revenues will inevitably be diverted from Social Security," The Wall Street Journal, October 22, 2008 --- http://online.wsj.com/article/SB122455061443852529.html?mod=djemEditorialPage

According to a Gallup survey conducted for the National Federation of Independent Business last December and January, only 10% of all businesses that hire between one and nine employees would pay the Obama tax. But 19.5% of employers with 10 to 19 employees would be socked by the tax. And 50% of businesses with 20 to 249 workers would pay the tax. The Obama plan is an incentive to hire fewer workers. For many months Mr. Obama and his band of economists have claimed that taxes don't matter much to growth or job creation. But only last week Mr. Obama effectively admitted that even he doesn't believe this. His latest "stimulus" proposal includes a $3,000 refundable tax credit for businesses that hire new workers in 2009 or 2010. So what sense does it make to offer targeted and temporary tax relief for some small businesses, while raising taxes by far more and permanently on others? Raising marginal tax rates on farmers, ranchers, sole proprietors and small business owners is no way to stimulate the economy -- and it's certainly no way to create J-O-B-S.
"Socking It to Small Business The Obama plan is an incentive to hire fewer workers," The Wall Street Journal, October 21, 2008

The answer lies in what conservative economists used to call the "Nirvana fallacy." This is the idea that any failure of the economy to attain optimality is a "market failure" that warrants government intervention. Conservative economists pointed out that the proper comparison is never between the operations of the actual market and an unattainable theoretical perfection, but between market-directed and government-directed or -regulated allocations of resources in particular economic settings. Market failures are ubiquitous, as the current crisis demonstrates. The crisis is not primarily a result of government actions. The quasi-governmental status of Fannie Mae and Freddie Mac and the pressures exerted on them by Congress to facilitate home ownership by insuring risky mortgages were contributing factors to the crisis, but the basic causes were misassessment by the industry of the risks associated with extremely high levels of borrowing, misunderstanding of risk by home buyers encouraged by real estate brokers, mortgage brokers, and banks, conflicts of interest by rating agencies, corporate compensation policies that truncated downside but not upside risk, and the private costs of disinvesting in an industry undergoing a bubble (the housing industry) before the bubble bursts, since until that moment the profits from riding with the bubble will be increasing. An additional factor was government inaction, but the failure of government to intervene in a market that is failing obviously presupposes rather than illustrates market failure. In contrast, gratuitous government intervention when there is no market failure is a genuine example of government failure.
Richard Posner, "Has the Market Economy Failed?" The Becker-Posner Blog, October 19, 2008 --- http://www.becker-posner-blog.com/

Which brings me to the last and most important reason for the neglect of the warning signs, because it suggests the possibility of responding in timely fashion to future risks of financial disaster. That is the absence of a machinery (other than the market itself) for aggregating and analyzing information bearing on large-scale economic risk. Little bits of knowledge about the shakiness of the U.S. and global financial systems were widely dispersed among the staffs of banks and other financial institutions and of regulatory bodies, and among academic economists, financial consultants, accountants, actuaries, rating agencies, and business journalists. But there was no financial counterpart to the CIA to aggregate and analyze the information--to assemble a meaningful mosaic from the scattered pieces. Much of the relevant information was proprietary, and even regulatory agencies lacked access to it. Companies do not like to broadcast bad news, and speculators planning to sell a company's stock short do not announce their intentions, as that would drive the stock price down, prematurely from their standpoint.
Richard Posner, "The Financial Crisis: Why Were Warnings Ignored?--" The Becker-Posner Blog, October 12, 2008 --- http://www.becker-posner-blog.com/

In addition, one should not minimize the great economic achievements of the past 25 years in the form of rapid growth in world GDP, low world inflation, and low unemployment in most countries. Perhaps these achievements will be overshadowed by a deep world recession, but that remains to be seen. If the impact of this financial crisis on the real economy is not both very severe and very prolonged, and time will answer that question, the combination of the past 21/2 decades of remarkable achievement, and the economic turbulence that followed, may still look good when placed in full historical perspective.
Nobel Laureate Gary Becker, "The Financial Crisis: Why Were Warnings Ignored?--" The Becker-Posner Blog, October 12, 2008 --- http://www.becker-posner-blog.com/

As the IRS looks to tighten up its Whistleblower program and make it more effective, it has once again made changes. Just last June they issued updated rules. And four months later, after a period of public comment, they've tweaked the rules again... this time to strengthen the confidentiality of informant identity. This was of particular concern to the Ferraro Law Firm, which represents numerous informants and has filed claims for more than $13 billion in underpaid taxes.
AccountingWeb, October 2008 --- http://www.accountingweb.com/cgi-bin/item.cgi?id=106235

The United States signed an agreement on Wednesday to give 150 million dollars to Palestinian Authority President Mahmoud Abbas's West Bank government, Agence France Presse reported. Palestinian Authority Prime Minister Salaam Fayad. The funds are the first installment of 555 million dollars pledged by Western countries at a donors' conference in Paris late last year intended to strengthen the Palestinian Authority and underpin recently revived peace talks. The money will go directly to the government's budget to help fill a massive fiscal shortfall left in the wake of a seven-year uprising and will contribute to a plan by Palestinian Authority Prime Minister Salaam Fayad in his plans to reform the failing Palestinian economy.
JPost, October 22, 2008 --- Click Here

By definition risk-takers often fail. So do morons. In practice it's difficult to sort them out. Is it likely that your manager will begin rewarding people who have failed, knowing that a good portion of them are morons and every one of them has caused the boss to receive at least one executive-induced wedgie? Or is it more likely that people who fail will be assigned to Quality Teams while the people who succeed will leave the company faster than a cheetah leaves a salad bar?
Scott Adams, The Dilbert Principle (Harper Business, 1996, p. 57)

The Christian Science Monitor is about to pull the plug on its print edition, just as the venerable newspaper is about to turn 100. The money-losing paper announced yesterday that it will stop publishing next April, except for a weekly edition, and shift its emphasis to the Internet. "Everyone who grew up with print, and everyone who worked in print like me, you feel a little sad," editor John Yemma said in an interview. But he said the Church of Christ, Scientist, which has heavily subsidized the $26 million annual cost of running the Boston-based paper, wants to stem the flow of red ink. Jensen Comment
The Christian Science Monitor has some of the trusted and unbiased reporters in the newspaper industry. This is a sad day in the history of a struggling industry. You can read about its history at http://en.wikipedia.org/wiki/Christian_Science_Monitor

Do It Yourself Interactive Whiteboard (about $60 instead of over $1,000)

October 27, 2008 message from Scott Bonacker [lister@BONACKERS.COM]

Mr. Lee encourages innovators to ask themselves, "Would providing 80 percent of the capability at 1 percent of the cost be valuable to someone?" If the answer is yes, he says, pay attention. Trading relatively little performance for substantial cost savings can generate what Mr. Lee calls "surprising and often powerful results both scientifically and socially."

As evidence, he might point to a do-it-yourself interactive whiteboard, another of his Wiimote innovations. Interactive whiteboards, which in commercial form generally sell for more than $1,000, make it possible to control a computer by tapping, writing or drawing on an image of the desktop that has been projected onto a screen. Mr. Lee's version can be built with roughly $60 in parts and free open-source software downloadable from his Web site.

Some 700,000 people, many of them teachers, have downloaded the software, Mr. Lee says. Much more expensive whiteboards may offer more features and better image resolution, but Mr. Lee's version is adequate for most classroom applications.


This seemed like it might be of interest, if not useful

Scott Bonacker CPA
Springfield, MO

Bob Jensen's threads on classroom design are at http://www.trinity.edu/rjensen/000aaa/thetools.htm#Design

MS Office in a Web Browser? Just Maybe!
The next version of Microsoft Windows, the software that defines the computing experience for most people, will nag users much less than its much-maligned predecessor, Vista. PC users will be able to test the new edition early next year. The world's largest software maker also is making Word, Excel and other key elements of Office -- its flagship "productivity" programs -- able to run in a Web browser. The move is meant to help confront rivals such as Google Inc. that offer free word processing and spreadsheet programs online, threatening one of Microsoft Corp.'s most precious profit centers.
"Microsoft says next Windows won't be as annoying," MIT's Technology Review, October 28, 2008 ---

The Controversial Settlement Between Google and Book Publishers

"Still Searching," by Jack Stripling, Inside Higher Ed, October 29, 2008 --- http://www.insidehighered.com/news/2008/10/29/google

Three years of legal wrangling between Google and a group of publishers came to an end Tuesday, but the $125 million settlement left unresolved the question of whether Google violated the law by digitizing copyrighted material without permission from rights holders.

The two lawsuits brought by authors and publishers challenged Google’s ambitious Book Search program, which has thus far digitized more than 7 million books from participating libraries. Authors and publishers had challenged Google’s contention that posting “snippets” of copyrighted works online was permissible under “fair use” standards, and the parties still disagree on that salient legal question.

Patricia Schroeder, president and chief operating officer of the Association of American Publishers, one of the plaintiffs in the suit, said both parties thought that resolving the litigation was more important than fighting out some of the larger — and lingering — legal questions about copyright in the digital age.

“We could have all fallen on our swords dueling to the last drop of blood over what is fair use,” said Schroeder.

Under the settlement, Google will pay the authors and publishers who have already sued and cover their legal fees. Perhaps more importantly, in the eyes of the plaintiffs, Google will use part of the settlement money to create a book registry that allows rights holders to be compensated for their participation in the Book Search program.

Siva Vaidhyanathan, an associate professor of media studies and law at the University of Virginia, said the book registry will improve scholarship by clarifying who owns the rights to works. That said, Vaidhanathan suggested that the settlement fell short of what many saw as the promise of the legal challenge.

“When this whole project started four years ago, there were a lot of people declaring Google was striking a major blow for fair use and freer content, and this settlement I think shows there was a bit of hyperbole attached to those claims. Clearly neither Google nor the publishers wanted to roll the dice on that question,” said Vaidhyanathan, author of the forthcoming book The Googlization of Everything.

Writers, Publishers to Get Paid

Not surprisingly, compensation has been a key sticking point for writers and publishers who have criticized Google Book Search. The settlement provides several potential revenue streams for both, including future revenues from advertising and book sales. While greater exposure for their works means writers stand to make more money in the future than they might have otherwise, they could receive as little as $60 for past instances in which Google copied their works without permission.

Peter Petre, an author, said the compensation arrangement outlined in the agreement is similar to the arrangement that the American Society for Composers, Authors and Publishers offers to the music industry. ASCAP distributes royalties to musicians when their works are broadcast or performed.

“What makes me most excited about this deal is not the $60 — it will buy a round of drinks. [But] this agreement creates the writers’ equivalent of ASCAP; that gives me hope, and it makes me feel secure about online displays of my work,” said Petre, treasurer of the Authors Guild, a copyright advocacy group for authors that joined the suit.

Agreement Makes More Content Available

Google’s digitization project began in 2004 with the help of several leading libraries, including Harvard and Stanford Universities, the University of Michigan at Ann Arbor, the University of Oxford and the New York Public Library. All the libraries agreed to let Google digitally scan millions of their books, including many that are copyrighted.

Google’s stated goal, apart from improving the breadth and value of its powerful search engine, was to spread the knowledge contained in the world’s greatest libraries. There have been limits, however, to what Google could share with users. Absent explicit agreements with authors and publishers, Google has offered only short “snippets” — a couple of sentences — of material that falls outside the public domain. As such, only about 2 million of the approximately 7 million digitized books are available in “preview” format, which allows users to see up to 20 percent of the content of a book.

The settlement agreement, which still requires court approval, would allow Google to put its entire digitized library in “preview” format. Furthermore, all public libraries in the U.S. will be able to offer single terminals where they can access full-text versions of the archives for free. Libraries that paid for subscription services would be given broader access — beyond single terminals — to full-text versions of the digitized materials.

“If I am a student or I’m a guy using a small town library, suddenly my computer screen or my library’s computer screen gives me access to the entire University of Michigan collection,” Petre said.

The details – including cost — of the proposed subscription service have yet to be outlined by Google.

Laine Farley, interim executive director of the California Digital Library at the University of California System, said it’s still unclear whether universities that supplied books for digitization will be given free or reduced cost subscriptions. California’s 10 campuses supplied hundreds of thousands of books to Google for the project.

“We expect that there will be some acknowledgment of our contribution to the project, and it remains to be seen how that relates to the subscription itself,” Farley said.

The participating institutions have already reaped some tangible benefits, not the least of which is the digitization of their materials. Even in its current form, Google Book Search has changed research by adding newly searchable dimensions of scholarly works, Farley said.

“It opens up the contents of these books in a way that they’ve never been ever available in the past, and we have stories from scholars and students about things they’ve been able to find,” she said. “Just in my own personal interest I’ve been able to find things that I’ve never been able to locate before.”

Peter Givler, executive director of the Association of American University Presses, was an early critic of Google’s digitization project. Gibler questioned Google’s interpretation of copyright law, even though several of the association’s members were participants in the project.

Gibler said Tuesday that he was still digesting the 141-page settlement agreement, but he said he was encouraged that it appears to protect writers and publishers while also promoting broader distribution of printed works.

“There’s a pile of reading here for me and for our lawyer, but I assume it’s good news,” he said.

Securing Google’s Dominance

What seems without question is that the settlement is one more step toward securing Google’s dominance in the search engine industry and the Internet writ large. For Vaidhyanathan, who has questioned Google’s commitment to preserving user privacy, the company’s growing sphere of influence is potentially troubling.

“I’m worried that Google is fast becoming our sole access point for information seeking,” he said, “and I think that’s a dangerous and unhealthy situation.”

A College President Investigated for Thesis Plagiarism

University of Texas System officials are investigating allegations that Blandina Cardenas, president of University of Texas-Pan American, plagiarized parts of her dissertation, the Associated Press reported. An packet sent to the university and to the AP claimed to identify 100 examples of plagiarism. The materials were sent by anonymous faculty members. The AP said that the samples it received included some statements that appeared to be historical fact, but also cases of direct language matches without attribution. The Pan American campus referred all questions to the system office, which confirmed that the allegations were under investigation.
Inside Higher Ed, October 29, 2008 --- http://www.insidehighered.com/news/2008/10/29/qt

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

2008 Gadget Ratings from Wired News --- http://www.wired.com/reviews

"New Keyboard Saves Accountants Time," SmartPros, January 18, 2008 --- http://accounting.smartpros.com/x60437.xml
The R-Tab Keyboard homepage is at http://www.r-tab.com/

Bob Jensen's threads on gadgets --- http://www.trinity.edu/rjensen/Bookbob4.htm#Technology


How Buying a Car Works --- http://money.howstuffworks.com/car-buying.htm

"Navigating the Web to Purchase a Car:  A Guide to Sites That Help Pinpoint The Car You Want," by Katherine Boehret, The Wall Street Journal, March 19, 2008; Page D8 --- http://www.trinity.edu/rjensen/Bookbob3.htm#Vehicles

"For Those Who Need Help Picking a Car, There Is CarZen," by Erick Schonfeld, The Washington Post, October 19, 2008 --- http://www.washingtonpost.com/wp-dyn/content/article/2008/10/20/AR2008102000013.html?wpisrc=newsletter&wpisrc=newsletter

Are you compatible with your car? A new site set to launch in a few days called CarZen aims to help you find the car that is perfect for you. The main feature of the site is a car consulting tool that asks you basic questions about the qualities you are looking for in a car (price, size, fuel economy, reliability) and then spits back a list with the best matches

CarZen is extremely detailed. You can narrow your search by brand, options (sunroof, power seats), cargo capacity, safety, or performance characteristics. Looking for a car with a high baby-seat score or on ethat is particularly easy to park in tight city spots? No problem. Once you finish answering the questions, which at times seem more like a personality test, the site generates a list of cars that can be sorted by best match, price, miles per gallon, or brand.

If you are looking for a new car and don't already know what you want, it is a good way to generate an initial list. You can drill down to get more details for each car. There is even a button to get a price quote, although that doesn't seem to be working at the moment. (Nevertheless, the business model is to create a trusted research tool for car buyers and generate lead-generation fees). The site is still in private beta, but you can check it out by clicking on the "learn more" button in the widget below and then clicking through to the site.

Jensen Comment
There is also a page entitled "Advice" for advice on such things as lease vs. buy --- http://www.carzen.com/advice

Bob Jensen's bookmarks on vehicle buying --- http://www.trinity.edu/rjensen/Bookbob3.htm#Vehicles

What vexing problems do Wikipedia Authority and Online Product Reviews share in common?

"Reconsidering Authority in Wikipedia World," by Scott Carlson, Chronicle of Higher Education, October 23, 2008 --- http://chronicle.com/wiredcampus/index.php?id=3413&utm_source=wc&utm_medium=en

Simson Garfinkel takes a look at authority and sourcing in Wikipedia world with an article in the latest edition of Technology Review. He focuses on Wikipedia’s requirement to cite published sources in adding information to Wikipedia articles. Yes, with a mob-written encyclopedia, a requirement for citing published, vetted sources makes sense, he writes.

“But there is a problem with appealing to the authority of other people’s written words: Many publications don’t do any fact checking at all, and many of those that do simply call up the subject of the article and ask if the writer got the facts wrong or right,” Mr. Garfinkel writes. “For instance, Dun and Bradstreet gets the information for its small-business information reports in part by asking those very same small businesses to fill out questionnaires about themselves.”

This policy is particularly problematic if you are the authority on a particular topic, but you can’t use your own base of knowledge. Jaron Lanier, a futurist, had problems changing a statement on the Wikipedia entry about himself that said he was a filmmaker. He wasn’t a filmmaker, yet every time he removed that non-fact, someone put it back in.

He finally got the item changed, but was then criticized for editing his own wikientry. (PR directors who maintain their college Wikipedia pages, take note.)



  1. Doesn’t the problem of unreliability of other sources apply to any secondary or tertiary work? ;) (…and on that note, I suggest reading the Wikipedia page Wikipedia:Reliable sources …)

Bob Jensen's threads on Wikipedia as a knowledge base are at http://www.trinity.edu/rjensen/searchh.htm#KnowledgeBases

"Online User Reviews: Can They Be Trusted? They're all over the Web. Everybody reads them. But are reader reviews reliable enough to depend on when it comes to spending your cold, hard cash?" by Robert Luhn, PC World via The Washington Post, October 23, 2008 --- Click Here

Anyone can write a product review, and everybody reads them. But can you trust them? I refer, of course, to reader or user reviews, the kind you find on Amazon, Buy.com, Epinions, PC World, Yelp, and even the sites of tech product manufacturers, such as Dell. They're everywhere.

But it's the fraudulent reviews--positive reviews contributed by "readers" paid by the company being evaluated--that worry critics and advocates alike.

In an October 2007 poll conducted by the PR firm Burson-Marsteller, 1000 savvy Web consumers (dubbed "e-fluentials" by some wordsmith who evidently was unfamiliar with the term " effluent") were clearly convinced that fake reviews are endemic--and could result in a backlash from online consumers.

The numbers tell the tale: 48% (up from 39% in 2001) believe that fake reviews are being planted on consumer sites. 57% say they won't buy a product if the reader reviews seem suspect. And a whopping 76% claim to double-check what they read online. All are signs of a healthy skepticism.

So, how pervasive are falsified reviews?

Beau Brendler, Director of Consumer Reports' WebWatch site, says that the bottom line is: "[Fake reviews] happen all the time--but proving it, quantifying it--is very hard."

WebWatch--whose motto is "Look Before You Click"-- says on its site that its credibility campaign has led more than 170 sites, including CNN, CNet, The New York Times, Travelocity, and Orbitz to agree to uphold WebWatch's credibility guidelines.

Barbara Kasser, author of Online Shopping Directory For Dummies and Internet Shopping Yellow Pages, says: "There's no way to check the reviewer's veracity or if they're on the take--they're anonymous." Another concern: the reviewer might not be competent. "How did [the reviewer] use the product? Did they use it properly? Did they follow the manufacturer's directions? There's no way to know," she points out.

Why So Enticing?

Many ordinary people consider reviews written by consumers to be more reliable, more critical, and ultimately, more useful than many other sources of information. At least that's what they told The Nielsen Company in a survey conducted in April 2007. The top three most trusted sources: "Recommendations from consumers" (78%), "Newspapers" (63%), and "Consumer opinions posted online" (61%). (In a story that PC World posted in 2003, we generally agreed with the above perceptions--but we're a bit more cynical now.)

Certainly, reader reviews have come a long way since the era of Usenet and reader forums. Depending on the site and its readers, you may find pithy commentary, long-winded rants, numeric ratings, pros and cons, graphs, and even reviewer videos.

But Mitch Meyerson, author of the book Guerilla Marketing on the Internet, thinks that "influenced" reviews (paid for or not) are pretty common. For example, says Meyerson, "authors often enlist friends, colleagues, and clients to review their books on Amazon."

According to Blogging Tips founder and Web developer Kevin Muldoon, "tech sites usually have fair, accurate [reader] reviews...but there are definitely more fake reviews [on sites] covering cosmetics and hotels." Read Muldoon's blog entry on his own guidelines for how he reviews products.

Continued in article

Bob Jensen's threads on consumer fraud and reporting of such fraud can be found at http://www.trinity.edu/rjensen/FraudReporting.htm

Robert Shiller's Financial Markets Course at Yale (Video and Audio on Demand) --- http://oyc.yale.edu/economics/financial-markets/

From Jim Mahar's Blog on October 23, 2008 --- http://financeprofessorblog.blogspot.com/

WOW! Now and then you get an email that changes your whole day for the better. That was what I just got from Jacob over at MoneyScience.com. WOW. I definitely know what I will be doing! Watching and listening. It does not et much better. The opportunity to listen in on one of the most respected FinanceProfessors in the world!

From MoneyScience --- Click Here
 The good folks at Yale have recently made Professor Robert Shiller's Spring Financial Markets Course at Yale available to the Public as Video and Audio (mp3).

The Course took place in the Spring 2008, so events have overtaken us somewhat, but still you have an excellent introduction to Financial Markets from one of the pre-eminent Economists of his generation - with Guest Lectures from such luminaries as Carl Icahn and Stephen Schwarzman and Lawrence Summers.

Jensen Comment
Based on the few Shiller lectures I viewed, I'm less enthusiastic about Shiller's course than is Jim Mahar. The lectures I viewed seemed superficial. I expected more from Yale.

"Yale Doubles Number of Free Online Courses," Converge Magazine, October 20, 2008 ---
These are not just course materials. These are entire courses on video.

  • On October 4, 2007 I could not find any accounting, finance, or economics videos at the UC Berkeley site. There were six courses that popped up for "Business."

    Here's a student, who created a RealPlayer playlist, explaining how to these videos --- http://www.youtube.com/watch?v=OUfKoXtwEu0

    Also see Webcast.Berkeley [iTunes, Real Player] http://webcast.berkeley.edu/ 

    UC Berkeley also has XLab --- http://www.berkeley.edu/news/media/releases/2004/07/13_xlab.shtml

    Nearly all prestigious universities now offer some form of open sharing of course materials, the most noteworthy of which is MIT. Yale, however, has some of the finest lectures on video --- http://www.yale.edu/opa/download/VLP_QuestionsAnswers.pdf

    From Princeton
    University Channel (video and audio) ---  http://uc.princeton.edu/main/

    FORA.tv (video and podcasts) brings together content from the Hoover Institution, the Global Philanthropy Forum, the World Affairs Council, the American Jewish Committee, and dozens of other organizations --- http://www.fora.tv/

    From the University of Texas
    Take Five from the University of Texas http://www.utexas.edu/inside_ut/take5/

    From Harvard
    Introduction --- http://athome.harvard.edu/about/about.htm
    Program List --- http://athome.harvard.edu/archive/archive.asp

    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

    Science Videos --- http://www.scivee.tv/

    Video Lecture Search
    Type in "Video Lectures" with quotation marks at http://megite.com/discover.php?q=learning
    Example:  David Deutsch Quantum Computation Lectures --- http://www.quiprocone.org/quipmain.htm  

    Educause Live --- http://www.educause.edu/content.asp?SECTION_ID=34&bhcp=1


    You can read about these and other examples of open sharing at major universities at

    For readers who are not familiar with Adobe Presenter, the following videos are informative:

    Overview Tutorial Video--- http://www.youtube.com/watch?v=4Kqcfq7s2Js 

    Part 1 of another overview video--- http://www.youtube.com/watch?v=Mwtr0Keclbw 

    Part 2 of another overview video --- http://www.youtube.com/watch?v=eXBKFrfsAyk 


    Acrobat Connect Professional features the following applications in addition to Acrobat Connect Professional: --- http://www.adobe.com/products/acrobatconnectpro/
    Also see  http://en.wikipedia.org/wiki/Adobe_Presenter#Applications

    Adobe Acrobat Connect (formerly Breeze Training)
    Adobe Acrobat Connect Professional Events (formerly Breeze Events)
    Adobe Presenter (formerly Breeze Presenter)

    • Unlimited and customizable meeting rooms
    • Multiple meeting rooms per user
    • Breakout sessions within a meeting
    • VoIP
    • Audio integration
    • Video conferencing
    • Meeting recording
    • Screen sharing
    • Notes, chat and whiteboarding
    • User management, administration and reporting
    • Polling
    • Central content library
    • Collaboration Builder SDK


    Adobe Presenter --- http://www.adobe.com/products/presenter/

    Rapidly create high-impact Adobe Flash presentations and eLearning courses from PowerPoint

    With just a few clicks in PowerPoint, you can transform drab presentations into engaging Adobe® Flash® multimedia experiences. Easily add narration, animations, interactivity, quizzes, and software simulations to eLearning courses.

    Key capabilities

    October 22, 2008 message from David Fordham, James Madison University [fordhadr@JMU.EDU]

    I'll probably catch a lot of flack for this, so I'm ready to be royally flamed:

    I have a question relating to Accounting Education using Computers and Multimedia. I apologize up front to those who are offended such a post, so please, just go ahead and hit Delete now...

    For those who aren't too irritated: I have a question about Adobe Presenter.

    Adobe Presenter is a recording add-in that let's you add sound narration to a PowerPoint presentation. It's a lot easier to use than the video editing software I'm using (iMovie, Final Cut, and especially my favorite, Adobe Premier CS3). Our instructional technology folks are trying to "sell it" as a great tool to replace the cumbersome video editing software I typically use.

    HOWEVER, I'm having trouble figuring out how to get the PowerPoint slide transitions to work.

    I have no problem with custom animations WITHIN a slide... the product seems to properly execute the entrance, motion, and exit of objects *on* a particular slide. The problem I'm having deals with the transitions BETWEEN slides.

    The way I use PowerPoint, it illustrates my talk, lecture, presentation, etc.... I talk, and while I'm talking, I move from slide to slide quite quickly. I'll have a slide with a photo, and I'll click the next slide which will have a successive photo or illustration. I make HEAVY use of specific slide transitions (fades, page turns, pushes down, pushes sideways, uncovers, followed by re-covers, etc.) depending on the educational effect I wish to convey to the audience, to reinforce the relationship between the topics covered by the slides. The cover/uncover/recover, the fades to black, the stripes to color, etc. all are useful communication aids.

    But Presenter seems to discard my slide transitions, and force me to "jump" from one slide to the next, in a sudden "cut". I don't want a sudden cut, I want a specific transition.

    Jumps are distracting. Jumps hurt the eyes, especially since I'll go through 100 slides in a 10-minute lesson. Especially distracting are those times I "fade to black" to indicate a major shift of thought... jumping from bright color, suddenly to black, back to bright color, is painfully distracting compared to a slow fade in and out.

    I've tried everything I can think of, and our tech support people don't seem to be much help, they say that "you can't do that". I find it unbelievable that a product as professional as Adobe would not recognize the communication importance of transitions as an essential communications adjunct. I find it unbelievable that they would make a product which recognizes and operates the in-slide animations, but discards and ignores the between-slide animations. After all, PowerPoint includes the slide transitions as an important feature, why would Adobe discard this? I'm just overlooking a setting or radio-button or something.

    Can anyone tell me where to find the slide-transition feature? I'm using Adobe Presenter 6.0.432, build 432. I've also tried the copy of Presenter 7.0 that our instructional tech dept has, and I can't find it there either.

    Again, I'm sorry for posting something so closely related to the listserv topic. I'll try not to waste everyone's time too much with on-topic questions like these...

    David Fordham
    James Madison University
    PS: Isn't it funny how you never hear the term "flamed" anymore? One of those "flash-in-the-pan words that seem old-fashioned nowadays, I guess..

    October 22, 2008 reply from Bob Jensen

    Hi David,

    I read the following at http://snipurl.com/pptransition s [www_adobe_com]

    PowerPoint slide transitions (animation effects that are applied by PowerPoint when one moves from one slide to another) is NOT supported by Adobe Presenter. These effects are dropped in output generated from Adobe Presenter.

    Any animations applied on objects in any slide is preserved by Adobe Presenter. For example if you have a slide where five bulleted lines of text appear one after another will be retained by Adobe Presenter.

    Bob Jensen

    Confessions of a Ghost Writer

    "Paper Money," by Scott McLemee, Inside Higher Ed, October 22, 2008 --- http://www.insidehighered.com/views/2008/10/22/mclemee 

    But after a while, it became clear that I had a serious disqualification for this line of work: the lack of speed. (Speed of production, that is; amphetamines were never part of the process.) In his article, Mamatas reports that he could turn out a term paper in 20 minutes. I spent longer than that just on the outline. By black-market standards, this was highly unprofessional.

    It was a matter of time before I left the business. And then my conscience started playing catch-up.

    A few months after hacking out a final paper for some kid with more cash than brains, I met a woman who was working on her dissertation. Its topic was something I knew just enough about to be able to ask some questions. For a guy with no good moves, this was a good move. Word from our mutual friends was that the interest was reciprocal. But it soon turned out that the grapevine was only doing me just so many favors.

    She mentioned having suspicions about the work being handed in by some of her students. And — she continued — the word was that I had first-hand information about the market for ghost-written papers. Could I tell her more about that, at some point? (This in a tone more curious than overtly disapproving; but still....)

    Now, cheating my customers out of an education had never seemed a cause for concern. They were doing a pretty thorough job of that on their own. But suddenly I could picture things from the vantage point of an earnest, hard-working instructor who would no more have gamed the system than she would have held up a bank.

    All the rationalizations fell away in a second; the embarrassment, so long evaded, now finally hit home. The experience was mortifying. Twenty years later, I still feel it. Regret always comes too late to do anyone much good, but better late than never.

    Continued in article

    "Plagiarism and 'Atonement'," by Eugene Volokh, The Wall Street Journal, December 12, 2006; Page A18 --- http://online.wsj.com/article/SB116588497688347029.html?mod=opinion&ojcontent=otep

    Two nurses, both aspiring novelists, helped tend British soldiers during World War II. Briony, the protagonist of Ian McEwan's award-winning novel "Atonement," is fictional. The late Lucilla Andrews is real: She became an author, pioneering romantic "hospital fiction," and also wrote a memoir of her war years. Therein lies the latest plagiarism scandalette to hit the news, sparked by an article in the British press. To be a credible character in a historical novel, Briony had to do the things wartime nurses did, and see the things they saw. It is no surprise that Mr. McEwan read Andrews's book when researching his own; and several passages from his book strongly resemble passages from her memoir.

    "Our 'nursing' seldom involved more than dabbing gentian violet on ringworm, aquaflavine emulsion on cuts and scratches, lead lotion on bruises and sprains," wrote Andrews (to give one example). "In the way of medical treatments, she had already dabbed gentian violet on ringworm, aquaflavine emulsion on a cut, and painted lead lotion on a bruise. But mostly she was a maid," wrote Mr. McEwan.

    Plagiarism? Legally actionable? Ethically reprehensible? Bad manners? Or good research, needed to produce accurate historical fiction?

    Plagiarism is easy to condemn but often hard to define. This is partly because the legal rules differ sharply from the ethical ones, and the ethical rules in scholarship, journalism and fiction differ from each other. And it is partly because the rules for using the facts uncovered by writers of history -- whether memoirists, historians or contemporaneous journalists -- must be different from the rules for using the original phrases that the writers created.

    Let's start with the law. It generally bans not plagiarism as such, but rather copyright infringement. (Trademark law might play a role in extreme plagiarism cases, but not in the typical ones.) And copyright infringement is both broader and narrower than what most people see as "plagiarism."

    For instance, an author can be held liable under copyright law even when he credits the original source from which he copies. The law concerns itself more with protecting authors' ability to profit from their works than with ensuring credit where credit is due. So if I translate Mr. McEwan's novel into Russian without his permission, trumpeting Mr. McEwan's authorship and saying that I am merely the translator, I am a copyright infringer, though not a plagiarist.

    On the other hand, an author is not liable for copying the facts that others have discovered, regardless of whether he gives credit. Copyright law doesn't give authors exclusive rights to facts, because such a monopoly would undermine debate, scholarship and literature. If I write a scholarly legal article that uses without attribution historical facts uncovered by another scholar, my failure to attribute is a serious ethical breach -- but not copyright infringement.

    So on to professional ethics, which properly differs depending on the profession. Academics have the most stringent obligations. If I write an academic work using, without attribution, facts uncovered by another historian, I commit two sins: First, I falsely claim originality for my own work. Second, I wrongly deny a scholar credit that is important to the scholar's reputation. The academic must therefore scrupulously attribute those facts that others have uncovered, and the long and heavily footnoted format of academic books and articles makes this easy.

    But the rules for newspaper articles that mention historical matters are different. Such articles usually don't claim originality of historical research; no reader would assume that snippets of history in an article about modern-day Iraq stem from the journalist's own archival research. The articles do not generally deny historians due professional credit: Scholars get professional respect chiefly based on other scholars' use of their work, not based on citations by reporters. And because space is short, and good journalism often relies on multiple historical sources, newspaper articles can't be expected to acknowledge each historian whose work the journalist used.

    The rules for novels are in between. Novelists are similar to journalists, but they do have space at the end of the book to briefly acknowledge the historical works on which they rely, without distracting from the novel's flow. If you've relied substantially on another's work, acknowledging this is the kind thing to do. Omitting the acknowledgment probably isn't unethical; it's not a lie, or the denial of the credit needed for success in the original author's profession. But it isn't very nice.

    Yet what about copying not just facts, but also another author's words, either literally or in a close paraphrase? Would a general acknowledgment at the end of the book be enough to justify this? Or is such copying impermissible, at least unless you expressly note it using quotation marks, or by writing "as Lucilla Andrews said"? In academic work, the answer is simple: Quote the original, and insert a footnote at the place you quote it. But what about a novel?

    A historical novel, to be accurate, must borrow those words needed to accurately reproduce the historical facts, even when the facts were uncovered by others. If nurses treated ringworm by dabbing gentian violet on it, that's what they did, and novelists must be able to say so. Nor can a novelist note the borrowing using quotation marks and footnotes, as they would interrupt the novel's flow. Writers who strive for factual accuracy must thus remain free to closely paraphrase the factual accounts of others.

    On the other hand, when the historian or memoirist depicted the facts in a colorful way that she herself created, the particular words shouldn't be copied, at least without express acknowledgment. A historical novelist is responsible for creating his own colorful descriptions.

    So where does this leave Mr. McEwan? Likely not guilty on any of the counts, if the account in the newspaper that first broke the story (the Nov. 26 Daily Mail) is thorough. Mr. McEwan borrowed facts, and those words that accurately described the facts. He is not guilty of copyright infringement, or of taking another's original expression without specific notation. And while he did rely on Andrews's autobiography, his acknowledgments page noted being "indebted" to Andrews and her book. Any such acknowledgment could always be made more prominent; but it appears to have been prominent enough.

    More broadly, we should recognize that not all use of another's words requires detailed acknowledgment. Words represent facts; and facts, once revealed, are there to be used, including in novelists' unfootnoted prose.

    Mr. Volokh is a professor of law at UCLA School of Law.

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

    "Suit Alleges Fraud in 'Resolving' Troubled Student Loans," by Paul Basken, Chronicle of Higher Education, October 23, 2008 --- http://chronicle.com/daily/2008/10/5550n.htm?utm_source=at&utm_medium=en

    Stretched across the brick wall at the far end of Sallie Mae’s Indiana call center, the hand-drawn banner looked to be a typical tribute to college basketball’s annual March Madness.

    Instead of listing the nation’s top 64 college teams, however, Sallie Mae managers had filled out their brackets with the names of the workers in telephone headsets who sat hunched over computers behind long lines of connected desks.

    Each week, the operators who “resolved” the greatest dollar volume of delinquent student loans advanced along the brackets, picking up department-store gift certificates worth $10, $20, or more along the way.

    Sallie Mae, the nation’s largest student-loan company, proudly shows off the 54,000-square-foot cinderblock barn and its rows of $9-an-hour phone operators. The facility, tucked inside a Muncie industrial park, is evidence, the company says, of Sallie Mae’s commitment to helping borrowers pay off their education loans with a minimum of financial distress to either the students or the government's guaranteed-loan system.

    Such work helped prevent more than $16.7-billion in potential student-loan defaults in 2007, according to USA Funds, a guarantee agency that works with Sallie Mae on debt-collection efforts.

    “As a result, U.S. taxpayers saved more than $16-billion in potential default costs, and student-loan borrowers avoided an estimated $5.5-billion in additional loan costs,” USA Funds said in its most recent annual report.

    But others, including those who have experienced life on opposite sides of the telephone lines, suggest that the Muncie facility is part of a carefully orchestrated system that ensures many student debts are grown as large as possible, ballooning Sallie Mae’s profits, before taxpayers and debtors get stuck with the final bill.

    Ballooning Debts

    A former Sallie Mae employee, in a "false claims" lawsuit against the loan company recently unsealed in federal court in Indiana, alleges that the student-loan giant used the practice of granting forbearances to systematically balloon student-loan debts.

    With a forbearance, struggling borrowers get a temporary break from making payments on their loans. But the interest on the loans continues to accumulate, often leaving borrowers in a worse financial bind over time.

    The forbearance, meanwhile, can help the lender, especially in circumstances unique to Sallie Mae. A federal student loan enters default status if it goes unpaid for more than 270 days, and lenders face financial penalties on all their federally guaranteed loans if too many of their customers default. Because a forbearance stops the 270-day clock, it helps a loan company keep its default rate from rising, while also letting the amount of borrower debt increase.

    When a loan enters default status under the federal system, its ownership passes to a guarantee agency—one of the 35 nonprofit entities nationwide that use federal money to repay student-loan companies when borrowers default. The guarantee agency is then responsible for trying to collect the loan.

    Most guarantee agencies are independent of the lenders they oversee. Sallie Mae, however, has a contractual arrangement with USA Funds, the nation’s largest guarantee agency, that gives Sallie Mae extensive financial and operational control over the guarantor that oversees its work. USA Funds, with only about 75 employees of its own, pays Sallie Mae about $250-million a year to provide hundreds of workers to perform most of its guarantor operations. That effectively has left Sallie Mae since 2000 in the role of overseeing its own lending activities.

    Rules Eased

    The ability of lenders to offer forbearances grew in 2002, when the Education Department eased rules to permit “verbal” forbearance agreements, in which the lender needs only the borrower’s spoken permission over the telephone.

    That change in departmental rules fostered the abuses, said the plaintiff in the Sallie Mae lawsuit, Michael Zahara, who worked from November 2004 through August 2005 at the Las Vegas offices of the Student Assistance Corporation. The Student Assistance Corporation is the division of Sallie Mae that performs certain jobs for USA Funds, including contacting borrowers whose loans have entered default.

    In his complaint, Mr. Zahara says telephone agents working for Sallie Mae on behalf of USA Funds routinely falsified borrower requests for forbearances, often just dialing a borrower’s telephone number and letting the line sit open for a few minutes, so that the company’s computers would record an apparent conversation.

    The agent would then list the borrower as having approved a forbearance, when no such approval occurred, he alleges. The law requires the lender to send a written confirmation to the borrower by mail, but it doesn’t require any proof that the letter was received.

    Mr. Zahara pursued his case under terms of the False Claims Act, in which a plaintiff who successfully identifies fraud against the government can receive a share of the recovery. The case seeks triple the amount of the money lost by the federal government. The suit offers no estimate of the losses in dollars alleged to have been suffered by taxpayers or borrowers, though it states that the call agents falsely claimed to have obtained verbal forbearances in "tens of thousands, and possibly hundreds of thousands" of cases.

    He filed the case in November 2005, and it remained under seal while the federal government evaluated whether to participate in it. A federal judge in Indiana, Sarah Evans Barker, ruled on June 20 that the seal could be lifted after federal lawyers said they would not immediately join the case but would allow it to proceed with the potential for joining it later.

    Accuser Fired

    Mr. Zahara said he was fired from his job in Las Vegas after he reported his concerns about the practice to federal investigators. Sallie Mae moved much of the operations to its new Indiana facility in October 2006, and Jeff Whorley, the executive vice president in charge of the Student Assistance Corporation, left Sallie Mae in January 2007.

    A Sallie Mae spokesman, Tom Joyce, said the company had not been served with any legal documents related to the case and could not comment on it. Sallie Mae’s practices, however, “are consistent with all laws and regulations as they relate to verbal forbearance in the guaranteed student-loan program,” Mr. Joyce said.

    Continued in article

    Bob Jensen's fraud updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm

    "The Econ Major’s Marginal Utility,"  by Andy Guess, Inside Higher Ed, October 23, 2008 --- http://www.insidehighered.com/news/2008/10/23/econ

    Given the many and conflicting reasons why students choose their majors — they liked an introductory course, it leads to well-paying jobs, it’s something they’re interested in, their parents made them do it — it’s understandably difficult to pinpoint how they truly feel about their area of concentration.

    A working paper that is making the rounds on the blogosphere tries to break down the question, focusing on what economics majors think about their chosen subject. And, as part of a Teagle Foundation initiative encompassing a number of different fields, the research examines how economics as a major fits into an overall liberal education. It’s an area of intense recent interest, especially as economics continues to increase in popularity among undergraduates and as some in the field point out its growing tendency to emphasize technical rigor over broader understanding or moral context.

    “That’s the direction that the economics profession is going,” said David Colander, the Christian A. Johnson Distinguished Professor of Economics at Middlebury College and co-author of the paper. “That is fine as one possibility, but it’s pulling economics away from its broader liberal arts foundations.”

    The report is based on two separate electronic surveys, one randomized and one more directed toward majors at top “research liberal arts” colleges. In total, there were over 1,700 respondents, and in general they like studying economics. Almost 79 percent said they were “highly satisfied” or “satisfied” with the major.

    Students’ happiness with their major appears to vary by type of institution, with one factor making all the difference: whether or not a college has a competitive business program. That, the authors argue, determines whether students who would rather study business are forced to settle for economics. If a college has a restricted-entry business program, the survey found that economics majors at that institution are on the whole less satisfied because some may have had to choose the concentration as a second choice.

    “This data suggests that the presence of an unrestricted-entry business program has a positive impact on the satisfaction levels of economics majors,” the authors write. “When such programs exist, the economics major is not forced to balance both the goals of students who would rather be in business programs with the goals of students who would study economics either way; therefore the economics major can more easily suit all of its students’ demands.”

    Students’ Level of Satisfaction With Economics Major, by Availability of Business Program

      Highly Satisfied Satisfied Somewhat Satisfied Unsatisfied
    Business Program
    42.9% 40.1% 14.8% 2.2%
    No Business Program 36.1% 52.1% 11.2% 0.6%
    Business Program
    22.3% 50.3% 22.8% 4.6%

    Source: “What Economics Students Think of the Economics Major”

    Perhaps not surprisingly, over a third of economics majors, 37.3 percent, find it difficult. The majority, 54.1 percent, said the major was at a “medium” level of difficulty. But even that differed by institution type: “Students generally considered the majors more difficult at liberal arts schools than at state schools. The difference is most pronounced in economics, considered hard by 25.4% of state school students compared to 40.2% of students at liberal arts schools. At research liberal arts school, the major was considered even harder; 44.2% of students considered the economics major hard.”

    Viewed next to econ majors’ perceptions of other majors, it’s clear that they find themselves near the top in terms of difficulty, with only mathematics, physics and chemistry rated as harder. “This suggests to us that the economics major has found a balance in terms of analytic difficulty and general understanding, which is about right for an undergraduate liberal education,” the report concludes.

    What about what students say they actually learn? Of those who responded, 88.5 percent said “the economic way of thinking,” followed by 75.5 who said they learned “how an economy works,” 70.2 who thought they only learned “a set of somewhat connected models” and 56.8 percent who said they’d picked up math and statistics. Students could choose multiple responses, with “economic literature” receiving the lowest rate, 38 percent.

    When applied to specific goals of a liberal education, however, the results are more varied. Colander pointed out, for example, that although 61.3 percent of respondents said the major was “highly successful” at teaching critical thinking skills, only 21.4 percent said the same about moral reasoning skills.

    The study also looked at some differences in perceptions of the economics major by gender: “While preparing for work and ability to communicate are considered important to both sexes, men tend to favor a stronger focus on critical thinking while women favor a stronger focus on living in a global society, breadth of interests and living with diversity.”


    Recommendation for a Baseball Novel by a Kid

    "Play Ball," by Michael Nelson, Chronicle of Higher Education, October 22, 2008 --- http://chronicle.com/review/brainstorm/

    Jason Wuerfel has no dog in the fight that begins tonight between the Tampa Bay Rays and the Philadelphia Phillies. He’s the vice president and director of baseball operations for the Traverse City Beach Bums, a Frontier League team in Traverse City, Michigan, that plays in Wuerfel Park and whose two chief officers are John (CEO) and Leslye (CFO) Wuerfel, Jason’s parents. An English major at the University of Michigan, Jason pitched for the Wolverines from 1999 to 2003. A couple years later he published his debut novel, Pray for Rain: A Baseball Story.

    I stumbled across Jason’s book while searching Amazon for something else. Nothing about the book is auspicious. It was written by, well, a kid. The name of the publisher appears nowhere on or in the book. No blurbs from other authors or baseball players anoint the back cover. I bought the book because it was the only contemporary college baseball novel I could find.

    And it turned out to be terrific — wonderful dialogue, interesting characters, and a good enough plot hung on the scaffolding of an academic year. I really do recommend it.

    Liberal arts college guy that I am, though, I found myself focusing on the ways in which Division I baseball at Michigan (as portrayed in the novel) differs from low budget, nonscholarship, relatively anonymous Division III baseball.

    Continued in article

    Bob Jensen's threads on electronic literature http://www.trinity.edu/rjensen/ElectronicLiterature.htm

    From Jim Mahar's Blog on October 20, 2008 --- http://financeprofessorblog.blogspot.com/

    Southwest's infatuation with fuel hedges backfires - MarketWatch: --- Click Here
    "Given oil's relentless ascent, investors have been dumbfounded that Southwest's hedging program wasn't universally used by other airlines, who unfailingly blame their weak financial performance in part on rising fuel costs.
    Then came the crash. Oil is now trading at half the price it fetched just three months ago. Suddenly, Southwest's aggressive bet on the market went bad
    No it did not go "bad". Almost by definition hedges will lose money when the risk the firm is hedging moves in their favor. So airlines worry about jet fuel prices. Holding other things constant, airlines drop in value as teh fuel prices rise and vice versa. So, their hedges are designed to "lose" money when the firm can better handle the losses and make money when operations would otherwise be hurting. In doing so they allow the firm (Southwest in this case) to focus on what they do well (run an airline) and not worry about what is outside of their control (price of fuel). The hedges are not designed to make money 100% of the time.

    Jensen Comment
    I think Southwest is probably more worried about the "cost" of future hedges than it is about what it may have lost (an opportunity loss only) when fuel prices plunged. When the outlook is very strong for future increases in fuel prices, good deals for airline hedging commence to disappear. Options become very high priced, and futures contracts have higher spreads between spot and futures prices (known as basis). Even though fuel prices have plunged in the past few months, the outlook is not at all good since none of the candidates the presidency or Congress is promising to strive for an end to deficit spending and a stronger dollar. Without a continued weakening of the U.S. dollar fuel prices are bound to rebound. The weakening dollar is the major cause of the long-term rise in fuel prices.

    Bob Jensen's Excel summary of hedging strategies might be useful in some courses, particularly courses focused on FAS 133. You may download my Excel workbook file --- http://www.cs.trinity.edu/~rjensen/Calgary/CD/Graphing.xls

    Bob Jensen's hedge accounting tutorials --- http://www.trinity.edu/rjensen/caseans/000index.htm

    Grant Thornton is Being Sued Separately

    "Jury Finds Parmalat Defrauded Citigroup," by Eric Dash, The New York Times, October 20, 2008 --- Click Here

    A New Jersey jury found that Parmalat, the Italian food and dairy company, had defrauded Citigroup and awarded the bank $364.2 million in damages.

    The 6-to-1 verdict cleared Citigroup of any wrongdoing after a five-month civil trial that delved into complex, off-balance-sheet accounting that enabled Parmalat to artificially raise its earnings.

    The verdict was returned on Monday in New Jersey Superior Court in Hackensack.

    For Citigroup, the decision will most likely be the last in several accounting scandals that entangled it earlier this decade. The bank previously reached settlements over its roles in Enron and WorldCom. But more litigation is coming.

    The bank is expected to face billions of dollars in legal claims over its role in the subprime mortgage market and is engaged in another battle with Wells Fargo over the takeover of the Wachovia Corporation.

    Parmalat’s new management, including its chief executive, Enrico Bondi, had sought up to $2.2 billion in damages from Citigroup, contending its bankers designed a series of complex transactions that helped Parmalat “mask their systemic looting of the company” while collecting tens of millions in fees. The Italian company collapsed in 2003 under billions of dollars of debt.

    Citigroup said it was a victim of Parmalat’s fraud and countersued for damages. On Monday, Citigroup said it was delighted that a jury had vindicated its position. “We have said from the beginning that we have done nothing wrong,” the bank said. “Citi was the largest victim of the Parmalat fraud and not part of it.”

    Officials from Parmalat could not be reached, but the company is expected to appeal the decision.

    Citigroup was the first financial services firm to go to trial in the United States over Parmalat’s accusations. Parmalat is pursuing separate claims against the Bank of America and Grant Thornton, the accounting firm, in Manhattan federal court. That case is expected to go to trial next year; both companies have denied any wrongdoing.

    In-Substance Defeasance Controversy Arises Once Again

    You can read the following at http://www.trinity.edu/rjensen/theory/00overview/speoverview.htm

    • Defeasance (In-Substance Defeasance)
    1. Defeasance OBSF was invented over 20 years ago in order to report a $132 million gain on $515 million in bond debt.   An SPE was formed in a bank ' s trust department (although the term SPE was not used in those days).  The bond debt was transferred to the SPE and the trustee purchased risk-free government bonds that, at the future maturity date of the bonds, would exactly pay off the balance due on the bonds as well as pay the periodic interest payments over the life of the bonds.
    2. At the time of the bond transfer, Exxon captured the $132 million gain that arose because the bond interest rate on the debt was lower than current market interest rates.  The economic wisdom of defeasance is open to question, but its cosmetic impact on balance sheets became popular in some companies until  defeasance rules were changed first by FAS 76 and later by FAS 125.
    3. Exxon removed the $515 million in debt from its consolidated balance sheet even though it was technically still the primary obligor of the debt placed in the hands of the SPE trustee.  Although there should be no further risk when the in substance defeasance is accomplished with risk-free government bond investments, FAS 125 in 1996 ended this approach to debt extinguishment.  FASB Statement No. 125 requires derecognition of a liability if and only if either (a) the debtor pays the creditor and is relieved of its obligation for the liability or (b) the debtor is legally released from being the primary obligor under the liability. Thus, a liability is not considered extinguished by an in-substance defeasance.



    From The Wall Street Journal Accounting Educators' Reviews on January 16, 2004

    TITLE: Investors Missed Red Flags, Debt at Parmalat 
    REPORTER: Henny Sender, David Reilly, and Michael Schroeder 
    DATE: Jan 08, 2004 
    PAGE: C1 
    LINK: http://online.wsj.com/article/0,,SB107348886029654700,00.html  
    TOPICS: Auditing, Debt, Financial Accounting, Financial Analysis, Fraudulent Financial Reporting

    SUMMARY: The article describes several points apparent from Parmalat's financial statements that, in hindsight, give reason to have questioned the company's actions. Discussion questions relate to appropriate audit steps that should have been taken in relation to these items. As well, financial reporting for in-substance defeasance of debt is apparently referred to in the article and is discussed in two questions.

    1.) Describe the signals that investors are purported to have missed according to the article's three authors.

    2.) Suppose you were the principal auditor on the Parmalat account for Deloitte & Touche. Would you have noted some of the factors you listed as answers to question #1 above? If so, how would you have made that assessment?

    3.) Why do the authors argue that it should have been seen as strange that the company kept issuing new debt given the cash balances that were shown on the financial statements?

    4.) Define the term "in-substance defeasance" of debt. Compare that definition to the debt purportedly repurchased by Parmalat and described in this article. How did reducing the total amount of debt shown on its balance sheet help Parmalat's management in committing this alleged fraud?

    5.) Is it acceptable to remove defeased debt from a balance sheet under USGAAP? If not, then how could the authors write that, "at the time, accountants and S&P said that [the accounting for Parmalat's debt] was strange, but that technically there was nothing wrong with it"? (Hint: in your answer, consider what basis of accounting Parmalat is using.)

    Reviewed By: Judy Beckman, University of Rhode Island 
    Reviewed By: Benson Wier, Virginia Commonwealth University 
    Reviewed By: Kimberly Dunn, Florida Atlantic University

    TITLE: A Peek at the Frenzied Final Days of Parmalat 
    REPORTER: Alessandra Galloni 
    ISSUE: Jan 02, 2004 
    LINK: http://online.wsj.com/article/0,,SB10730013852501700,00.html 

    More on Grant Thornton and Parmalat --- http://www.trinity.edu/rjensen/Fraud001.htm#GrantThornton

    In-Substance Defeasance and Other Off-Balance Sheet Contracting --- http://www.trinity.edu/rjensen/theory01.htm#OBSF2

    Keeping Score on the SEC in 2008

    "The SEC in 2008: A Very Good Year? A terrific one, the commission says, tallying a fiscal-year record in insider-trading cases, and the second-highest number of enforcement cases overall. But what would John McCain say?" by Stephen Taub and Roy Harris, CFO.com, October 22, 2008 --- http://www.cfo.com/article.cfm/12465408/c_12469997

  • It was a great year for Securities and Exchange Commission enforcement, according to the SEC. In a fiscal-year-end summary, it notes, for example, that it brought the highest number ever of insider trading cases.

    And altogether, it took the second-highest number of enforcement actions in agency history.

    "The SEC's role in policing the markets and protecting investors has never been more critical," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement. "The dedicated enforcement staff has been working around the clock to investigate and punish wrongdoing."

    The celebration of these records and near-records, however, comes during a time of widespread charges of what critics call lax policing by the regulator. They question its performance before the powderkeg of subprime mortgage lending, amid loose standards within major financial institutions, exploded into the worst global financial crisis since the Great Depression. Just a month ago, Republican presidential candidate John McCain promoted the replacement of SEC Chairman Christopher Cox, while many legislators have supported folding the SEC and other agencies into one larger, more encompassing financial regulator.

    But this day, at least, was one for the SEC proudly to recount the 671 enforcement actions it took during the most recent fiscal year. And it made special note of how insider trading cases jumped more than 25 percent over the previous year.

    Among those trading cases, the SEC seemed to prize most highly the charges against former Dow Jones board member David Li, and three other Hong Kong residents, in a $24-million insider-trading enforcement action, along with the charging of the former chairman and CEO of a division of Enron Corp. with illegally selling hundreds of thousands of shares of Enron stock based on nonpublic information.

    Market manipulation cases surged more than 45 percent. They included charges against a Wall Street short seller for spreading false rumors, and charging 10 insiders or promoters of publicly traded companies who made stock sales in exchange for illegal kickbacks.

    Among the major fraud cases, the SEC sued two Bear Stearns hedge fund managers for fraudulently misleading investors about the financial state of the firm's two largest hedge funds. The regulator also charged five former employees of the City of San Diego for failing to disclose to the investing public buying the city's municipal bonds that there were funding problems with its pension and retiree health care obligations and those liabilities had placed the city in serious financial jeopardy.

    Illegal stock-option backdating was also a big focus of the agency in 2008. The SEC charged eight public companies and 27 executives with providing false information to investors based on improper accounting for backdated stock option grants.

    The SEC said that another growth area involved cases against U.S. companies that use corporate funds to bribe foreign officials, an activity precluded by the Foreign Corrupt Practices Act. In 2008, the SEC filed 15 FCPA cases. Since January 2006, the SEC has brought 38 FCPA enforcement actions — more than were brought in all prior years combined since FCPA became law in 1977.

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

    Bob Jensen's threads on creative accounting are at http://www.trinity.edu/rjensen/theory01.htm#Manipulation
    Also see http://www.trinity.edu/rjensen//theory/00overview/AccountingTricks.htm

    Peter, Paul, and Barney: An Essay on 2008 U.S. Government Bailouts of Private Companies ---


    Meanwhile in the U.K., the Government Protects Reckless Bankers

    "Off the legal hook: The law does not protect individuals from the recklessness and failings of company directors. It should," by Prim Sekka, The Guardian, October 25, 2008 --- http://www.guardian.co.uk/commentisfree/2008/oct/25/banking-law

    The current financial crisis has been manufactured in company boardrooms. Its authors include the best executive directors, non-executive directors, accountants, lawyers and sundry business advisers. Most directors received profit-related remuneration. Innocent stakeholders lost savings, investments, jobs, homes and pensions.

    Among many reckless acts, bank executives used depositors' and investors' monies to place clever bets on the movement of interest rates, exchange rates, commodity prices and virtually everything else. They borrowed heavily. At some banks, for every £1 of shareholder investment, directors borrowed £33 – inother words, they had a leverage ratio of 33:1, meaning that just over 3% of the company was financed by long-term funds. This meant that if the value of the bank's assets declined by just over 3%, the bank would technically be bankrupt. Many banks had even higher leverage ratios. With the full approval of auditors, most of them reported toxic assets as good. They also moved more than $5tn of assets and liabilities off balance sheet. All this helped to improve earnings and maximise the profit related remuneration of bank directors. There is a clear conflict of interests between the interests of directors and wellbeing of business stakeholders. It is difficult to see how the directors exercised reasonable care, skill and diligence in devising their policies.

    Successive governments have been too keen to shield their friends from public scrutiny. No independent inspectors were appointed to investigate failures at Polly Peck, The Accident Group, Bank of Credit and Commerce International (BCCI), or Versailles Group Plc. Such is the hold of deregulationist philosophies that the Department of Business, Enterprise and Regulatory Reform (BERR) does not even have an in-house unit to investigate major corporate abuses. It outsources that function to major auditing firms, the very firms which have given a clean bill of health to the accounts of distressed banks.

    Abuses by big names in the City have been flagged before. For example, a 1997 government report on Guinness plc found "firstly, the cynical disregard of laws and regulations; secondly the cavalier misuse of company monies; thirdly, a contempt for truth and common honesty. All these in a part of the City which was thought respectable". Yet little has been done to enhance people's rights against executive abuses.

    Section 171 of the Companies Act 2006 states that a director must act in good faith, promote the success of the company for the benefit of its members [shareholders] as a whole and in doing so have regard (among other matters) to "(a) the likely consequences of any decision in the long term, (b) the interests of the company's employees, (c) the need to foster the company's business relationships with suppliers, customers and others, (d) the impact of the company's operations on the community and the environment, (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly as between members of the company".

    Lawyers could use this law to argue that directors have been negligent and harmed the interests of stakeholders. However, directors do not owe a 'duty of care' to any individual shareholder, employee, depositor or any other stakeholder. The interests of stakeholders, such as employees, pension schemes members, suppliers, customers and local communities have been subordinated to the interests of the company. Though the shareholders may bring class actions to sue directors for negligence, the law does not empower employees, pension scheme members or depositors to do the same. Neither an individual shareholder nor any other stakeholder can sue auditors as they only owe a 'duty of care' to the company, as a legal person. Auditors enjoy too many liability shields and can escape liability even after admitting negligence.

    The UK is ill-equipped to investigate the current financial crisis, or prosecute its architects. Individual stakeholders have lost property, but are not in a position to sue negligent directors and auditors. Thus the UK state is failing in its duty to protect the property rights of its citizens. There is an urgent need to abandon deregulationist policies and revise corporate laws.

    From the Scout Report on October 24, 2008

    AltMove Manager 2.1.4 --- http://www.deskex.com/Altmove/index.asp 

    AltMove Manager doesn't reinvent the mouse, but it certainly enhances its general functionality. With AltMove Manager, users can quickly and easily minimize and restore windows, grab screenshots, and even magnify a window under the mouse. Visitors can also consult the Actions menu to add a few more functions, if they wish to do so. This version is compatible with computers running Windows NT and newer.

    Express Scribe 4.26 --- http://www.nch.com.au/scribe/index.html

    If you're hoping to transcribe a speech for an upcoming project, you'll want to look over Express Scribe 4.26. With this transcription player, users can adjust the playback speed, manage various audio files, and even use a set of multi-channel controls. This particular version of Express Scribe is compatible with computers running Windows 95 and newer.

    Bob Jensen's helpers for speech recognition are at http://www.trinity.edu/rjensen/Bookbob4.htm#SpeechRecognition


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

    Education Tutorials

    Cultivating Demand for the Arts: Arts Learning, Arts Engagement, and State Arts Policy ---

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

    Engineering, Science, and Medicine Tutorials

    Molecular Movies: A Portal to Cell & Molecular Animation (video) --- http://www.molecularmovies.com/

    Pure and Applied Chemistry --- http://www.iupac.org/publications/pac/

    USDA: Animal Welfare Information Center --- http://awic.nal.usda.gov/nal_display/index.php?info_center=3&tax_level=1

    Zorba Paster on Your Health --- http://www.wpr.org/zorba/

    From the Scout Report on October 24, 2008

    Study documents dramatic rise in the incidence of food allergies among children Study: Food allergies on the rise in kids http://www.usatoday.com/news/health/2008-10-22-food-allergies_N.htm 

    WebMD: Food Allergy in Kids Up 18% http://www.webmd.com/allergies/news/20081022/food-allergy-in-kids-up-18- percent 

    Food Allergy Among U.S. Children: Trends in Prevalence and Hospitalizations [pdf] http://www.cdc.gov/nchs/data/databriefs/db10.pdf 

    Kids With Food Allergies [pdf] http://www.kidswithfoodallergies.org/ 

    The Food Allergy Research and Resource Program [pdf] http://www.farrp.org/ 

    The Food Allergy & Anaphlyaxis Network [pdf] http://www.foodallergy.org/ 


    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

    Nuclear Deterrence in the Age of Nuclear Terrorism Video
    Graham Allison, MIT's Technology Review, November/December 2008 --- http://www.technologyreview.com/video/?vid=95
    Graham Allison, a professor of government at Harvard University and the director of the Belfer Center for Science and International Affairs at the Kennedy School of Government, talks about the threat of nuclear terrorism.

    UNdata --- http://data.un.org/
    Other data --- http://www.trinity.edu/rjensen/Bookbob1.htm#EconStatistics

    Robert Shiller's Financial Markets Course at Yale (Video and Audio on Demand) --- http://oyc.yale.edu/economics/financial-markets/

    From Jim Mahar's Blog on October 23, 2008 --- http://financeprofessorblog.blogspot.com/

    WOW! Now and then you get an email that changes your whole day for the better. That was what I just got from Jacob over at MoneyScience.com. WOW. I definitely know what I will be doing! Watching and listening. It does not et much better. The opportunity to listen in on one of the most respected FinanceProfessors in the world!

    From MoneyScience --- Click Here
     The good folks at Yale have recently made Professor Robert Shiller's Spring Financial Markets Course at Yale available to the Public as Video and Audio (mp3).

    The Course took place in the Spring 2008, so events have overtaken us somewhat, but still you have an excellent introduction to Financial Markets from one of the pre-eminent Economists of his generation - with Guest Lectures from such luminaries as Carl Icahn and Stephen Schwarzman and Lawrence Summers.

    The Bidding Game [Game Theory] --- http://www.beyonddiscovery.org/content/view.article.asp?a=3681

    From MIT's Sloan School of Management Open Courseware Project --- http://ocw.mit.edu/OcwWeb/Sloan-School-of-Management/

    MIT OpenCourseWare | Sloan School of Management | 15.220 Global Companies today confront an increasing array of choices regarding markets, locations for key activities, outsourcing and ownership modes, and organization and processes for managing across borders. This course provides students with the conceptual tools necessary to understand and work effectively in today ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-220Spring-2008/CourseHome/ - 15k - 2008-07-31

    MIT OpenCourseWare | Sloan School of Management | 15.220 Global This section contains information about additional reading materials regarding the course.ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-220Spring-2008/Readings/ - 18k - 2008-07-31
    [ More results from ocw.mit.edu/OcwWeb/Sloan-School-of-Management/15-220Spring-2008 ]

    New Markets/New Entrants Global Strategy and Organization Elena Page 1. 1 New Markets/New Entrants Global Strategy and Organization Elena Obukhova
    MIT Sloan School of Management February 2008 Page 2. 2
    ocw.mit.edu/NR/rdonlyres/Sloan-School-of-Management/15-220Spring-2008/8186556F-F5F2-467A-8FFF-46370C9FF1C4/0/lec7.pdf - 2008-07-31

     The Spirit of High Tech Entrepreneurship at MIT: What s Hot and Page 1. 15.220 Spring 2007 Global Strategy and Organization 15.220 Donald
    Lessard MIT Sloan School of Management MIT Sloan Fellows
    ocw.mit.edu/NR/rdonlyres/Sloan-School-of-Management/15-220Spring-2008/18B6BA33-8812-4AF7-BF2F-C03250487723/0/lec1.pdf - 2008-07-31
    [ More results from ocw.mit.edu/NR/rdonlyres/Sloan-School-of-Management ]

    Free Online MIT Course Materials | Sloan School of Management MANAGEMENT AND BUSINESS COURSES FROM MIT OPENCOURSEWARE.ocw.mit.edu/OcwWeb/Sloan-School-of-Management/ - 59k - 2008-10-17

    Free Online MIT Course Materials | Newsletter | MIT OpenCourseWareHere is the current “MIT OpenCourseWare Update" e-newsletter. Subscribe and you’ll receive notification of new courses and other OCW news.ocw.mit.edu/OcwWeb/web/about/newsletter/ - 19k - 2008-10-17

    Free Online MIT Course Materials | New Courses | MIT The following courses were published by MIT OpenCourseWare within the past twelve months.ocw.mit.edu/OcwWeb/web/courses/new/ - 51k - 2008-10-22

    Free Online Course Materials | Courses | MIT OpenCourseWareFree Courses, Lecture Notes, Syllabus, Tutorials, Audio & Video from MIT professors. All Free. No registration. | MIT OpenCourseWare | ocw.mit.eduocw.mit.edu/OcwWeb/Global/all-courses.htm - 101k - 2008-10-23

    Other Open Courseware from Major Universities --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

    Podcasts from the Society for Applied Anthropology & the University of North Texas --- http://sfaapodcasts.net/

    "Yale Doubles Number of Free Online Courses," Converge Magazine, October 20, 2008 ---
    These are not just course materials. These are entire courses on video.

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

    Law and Legal Studies

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

    Math Tutorials

    The Bidding Game [Game Theory] --- http://www.beyonddiscovery.org/content/view.article.asp?a=3681

    National Portrait Gallery: Ballyhoo! Posters as Portraiture --- http://www.npg.si.edu/exhibit/ballyhoo/
    Face-to-Face blog - Smithsonian National Portrait Gallery --- http://face2face.si.edu/

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

    History Tutorials

    Stereoviews of the French Second Empire (Napoleon)1855-1870 --- http://digicoll.library.wisc.edu/History/subcollections/StereoFranceAbout.html

    SoundAboutPhilly --- http://www.gophila.com/soundabout/

    Tarahumara People: National Geographic Magazine http://ngm.nationalgeographic.com/2008/11/tarahumara-people/gorney-text

    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 Tutorials

    Great Conversations in Music [multimedia] --- http://lcweb2.loc.gov/diglib/ihas/html/greatconversations/great-home.html

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

    Writing Tutorials

    "How to Write With Style," by Kurt Vonnegut --- http://literature.sdsu.edu/onWRITING/vonnegutSTYLE.html

    NewsLab --- http://www.newslab.org/

    Writing.com writing helpers --- http://writing-world.com/

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

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


    "Many cough medicines lack effective dose, say doctors, studies," by Kayce T. Ataiyero, PhysOrg, October 24, 2008 ---

    "Feel-good foods: What you eat can affect your mood," by Julie Deardorff, PhysOrg, October 24, 2008 ---

  • Still, there's growing recognition in the medical community that the right food choices can improve your mood. Though drugs are often considered the first line of treatment for depression, a dietary change might be all you need, says James Gordon, a psychiatrist who advocates non-drug approaches to depression.

    Gordon, a clinical professor at the Georgetown University School of Medicine, believes what we eat affects how we think and feel. "It's a wake-up call to let us know our body is out of balance."

    Food can help restore that equilibrium, Gordon wrote in his new book, "Unstuck" (The Penguin Press, $25.95). The trick is knowing which key nutrients to include, and which foods to avoid.

    Nutritional changes aren't a magic bullet; they're subtle pieces of a treatment plan that might also include therapy, exercise_one of the most effective depression busters_and stress-reduction techniques.

    But "diet can help with virtually any chronic condition" including depression, said registered dietitian Wendy Bazilian, who holds a doctorate in public health. Just remember that major depression might require an integrative approach that uses food in conjunction with other therapies, including medication and counseling. And never abruptly stop taking medication even if you're experiencing side effects such as weight gain and sexual dysfunction; talk to your doctor about tapering down.

    Eat more ...

    1. Salmon. Fatty, cold-water fish such as salmon contain omega-3 fatty acids, which keep cell membranes pliable and flexible, said neurosurgeon Larry McCleary, founder of a research group that looks at natural ways to treat health issues. It's also in tuna, anchovies and sardines, but since fish fat is also a good place to store heavy metals, pesticides and poylchlorinated biphenyls (PCB), consider plant-based sources, including walnuts, flax seeds, pumpkin seeds and green, leafy vegetables.

    2. Oatmeal, soy milk and two scrambled eggs. This meal will give you 500 milligrams of tryptophan, an amino acid that's a precursor for the neurotransmitter serotonin, the brain's feel-good hormone. Many antidepressants are designed to prolong the activity of serotonin in our cells, but you can actually increase the levels by eating carbohydrates (with the exception of fructose, the sugar in fruit), said Judith Wurtman, author of "The Serotonin Power Diet" (Rodale, $24.95).

    3. Spinach: Low levels of the B vitamin folate, found in spinach, peas, navy beans, orange juice, wheat germ or avocado, may play a role in depression in some patients, said Brent Bauer, director of the Mayo Clinic's Complementary and Integrative Medicine Program.

    4. Vitamin D supplement. Vitamin D has been shown to help with seasonal affective disorder, said Bruce Hollis, professor of pediatrics at the Medical University of South Carolina. It may also have an anti-inflammatory effect and increase the flexibility of cell membranes, making the brain's neurotransmitters work better. While primarily generated after the skin soaks up the sun's ultraviolet B rays, Vitamin D can be obtained from oily fish and supplemented products like cow or soy milk and orange juice.

    But Hollis says the recommended daily allowance - 200 to 400 international units per day_is far too low. Instead, supplement with 2,000 IU's or higher, especially between October and April for Chicagoans. At these levels, though, food isn't a good option, since you'd have to drink a gallon of milk a day and no one needs those calories, Hollis said.

    5. Broccoli and blueberries: When combined with protein in fish, chicken and turkey, high-fiber, non-starchy vegetables help stabilize blood sugar levels, said Jack Challem, author of "The Food-Mood Solution" (Wiley, $24.95). "Our moods usually track with blood sugar levels," Challem said. "When our blood sugar is on the rise right after we eat, most people feel pretty contented. If it goes up too high, people feel sleepy because high blood sugar turns off orexins, a family of neuropeptides involved in feeling alert." Superfruits such as blueberries are high in antioxidants, which are substances that absorb the free radicals produced by stress. Too many free radicals cause wear and tear on the body. Challem recommends green leafy vegetables, broccoli, cauliflower, raspberries, blueberries, blackberries, and kiwifruit.

    6. Quinoa. Whole grains, a good source of B vitamins, break down and release sugar slowly, so you don't get high levels of insulin and the ups and down of blood sugar, said Gordon. Quinoa, a seed that is classified as a grain, is considered one of the best sources of protein in the vegetable kingdom. Also try oats, brown rice, or whole wheat bread or pasta.

    Eat less ...

    Red meat. As you increase omega-3's, try to cut down on the other type of fatty acid, omega-6, which is found in beef. Though essential for brain health, omega-6's are associated with promoting inflammation. Omega-6's are also found in corn and vegetable oils.

    Fried foods. Fat is a very important part of a cell's membranes. But trans fats and saturated fats make the membranes rigid; then the neurotransmitters don't work as well. Fried foods, hamburgers, french fries, butter, cheesecake, whole milk and beef are high in saturated fat. A product has trans fats if the ingredients list "partially hydrogenated oils." Food manufacturers are allowed to list amounts of trans fat with less than 0.5 gram as 0 on the Nutrition Facts panel. To avoid it, read labels.

    Gas station food. Processed foods contain refined flour and give you high doses of sugar but lack critical nutrients, said Gordon. "You'll often experience a feeling of well-being from the sugar when levels are high, but when it's low you experience a letdown or fatigue." Refined sugars include white table sugar, white flour, high fructose corn syrup.

    Alcohol and caffeine. Though alcohol is a stimulant in low doses, it also depletes the brain's mood elevator, serotonin. Caffeine blocks the soothing effects of the brain's "feel-good" messenger called GABA (gamma-amino butyric acid) that can calm mood and the digestive tract, said Molly Siple, author of "Eating for Recovery" (Lifelong, $17.95). "Refined foods and caffeine tend to raise the blood glucose," she said. "The drop is a route into depression."

    "Prostates Grown from Stem Cells:  New proof that the mouse prostate contains stem cells could aid cancer research," by Jocelyn Rice, MIT's Technology Review, October 23, 2008 --- http://www.technologyreview.com/biomedicine/21594/?nlid=1452

    A single adult stem cell from the prostate of a mouse can develop into an entire functional organ, scientists reported online yesterday in Nature. The finding proves that a population of stem cells exists in the adult prostate, as many have long suspected, and it could provide insight into how prostate cancer develops.

    "It's extremely exciting, the concept that you can reconstitute an entire prostate from a single cell," says Tyler Jacks, director of the David H. Koch Institute for Integrative Cancer Research, at MIT, who was not involved in the work. "That's impressive stuff."

    Unlike embryonic stem cells, which can potentially develop into any cell type in the body, adult stem cells are tissue-specific. Many organs are believed to house populations of adult stem cells, but in most cases their existence remains unproven. Known adult stem cells, however, can give rise to all the cell types that characterize the organs in which they're found.

    To sift out potential adult prostate stem cells, researchers at Genentech, in San Francisco, zeroed in on a group of cell-surface markers associated with suspected prostate stem cells. Since many of these markers are individually unreliable and poorly understood, the researchers tested a new one as well: a receptor protein called c-kit, which is known to be associated with other types of stem cells.

    Using c-kit and three other markers, the researchers, led by senior scientist Wei-Qiang Gao, isolated a small population of likely stem cells from the prostates of mice. But while markers can point to candidates, they can't unequivocally prove the identity of a stem cell. The cell still needs to demonstrate the capacity to develop into an entire organ.

    To test for that capacity, Gao and his colleagues grafted individual stem-cell candidates onto the kidneys of living mice. In order to provide necessary developmental cues, they transferred, along with each cell, some connective cells from the urogenital cavities of rats. Three months later, the researchers removed the kidneys and analyzed the fate of the grafted cells. Of the 97 single-cell transplants, 14 had grown into fully functioning prostates--complete with multiple cell types, characteristic branching structures, and prostate-specific proteins.

    Other groups have grown prostates in living mice from clumps of cells, but never before from a single cell. "That's really the gold standard--that there's an adult, tissue-specific stem cell," says Scott Cramer, an associate professor of cancer biology at Wake Forest University School of Medicine, who was not involved in the study. The only other solid tissue for which this feat has been accomplished is the breast: a single breast stem cell can develop into an entire mammary gland.

    Household hints forwarded by Maureen

    Some old ones, some new.

    Peel a banana from the bottom and you won't have to pick the little stringy things off of it. That's how the primates do it.

    Take your bananas apart when you get home from the store. If you leave them connected at the stem, they ripen faster.

    Store your opened chunks of cheese in aluminum foil. It will stay fresh much longer and not mold!

    Peppers with 3 bumps on the bottom are sweeter and better for eating. Peppers with 4 bumps on the bottom are firmer and better for cooking.

    Add a teaspoon of water when frying ground beef. It will help pull the grease away from the meat while cooking. To really make scrambled eggs or omelets righ add a couple of spoonfuls of sour cream, cream cheese, or heavy cream in and then beat them up.

    For a cool brownie treat, make brownies as directed. Melt Andes mints in a double broiler and pour over warm brownies. Let set for a wonderful minty frosting.

    Add garlic immediately to a recipe if you want a light taste of garlic and at the end of the recipe if you want a stronger taste of garlic. Leftover snickers bars from Halloween make a delicious dessert. Simply chop them up with the food chopper. Peel, core and slice a few apples. Place them in a baking dish and sprinkle the chopped candy bars over the apples. Bake at 350 for 15 minutes. Serve alone or with vanilla ice cream. Reheat Pizza Heat up leftover pizza in a nonstick skillet on top of the stove, set heat to med-low and heat till warm. This keeps the crust crispy. No soggy micro pizza. I saw this on the cooking channel and it really works.

    Easy Deviled Eggs

    Put cooked egg yolks in a zip lock bag. Seal, mash till they are all broken up. Add remainder of ingredients, reseal, keep mashing it up mixing thoroughly, cut the tip of the baggy, squeeze mixture into egg. Just throw bag away when done easy clean up.

    Expanding Frosting

    When you buy a container of cake frosting from the store, whip it with your mixer for a few minutes. You can double it in size. You get to frost more cake/cupcakes with the same amount. You also eat less sugar and calories per serving.

    Reheating refrigerated bread To warm biscuits, pancakes, or muffins that were refrigerated, place them in a microwave with a cup of water. The increased moisture will keep the food moist and help it reheat faster.

    Newspaper weeds away. Start putting in yor plants, work the nutrients in your soil. Wet newspapers, put layers around the plants overlapping as yu go cover with mulch and forget about weeds. Weeds wil get through some gardening plastic, tey will not get through wet newspapers. Broken Glass Use a wet cotton ball or Q-tip to pick up the small shards of glass you can't see easily.

    No More Mosquitoes

    Place a dryer sheet in your pocket. It will keep the mosquitoes away.

    Squirrel Away!

    To keep squirrels from eating your plants, sprinkle your plants with cayenne pepper. The cayenne pepper doesn't hurt the plant and the squirrles won't come near it.

    Flexible vacuum To get something out of a heat register or under the fridge add an empty paper towel roll or emplty gift wrap roll to your vacuum. It can be bent or flattened to get in narrow openings.

    Reducing Static Cling Pin a small safety pin to the seam of your slip and you will not have a clingy skirt or dress. Same thing works with slacks that cling when wearing panty hose. Place pin in seam of slacks and ta da! static is gone.

    Measuring Cups

    Before you pour sticky substances into a measuring cup, fill with hot water. Dump out the hot water, but don't dry cup. Next, add your ingredient, such as peanut butter, and watch how easily it comes right out.

    Foggy Windshield?

    Hate foggy windshields? Buy a chalkboard eraser and keep it in the glove box of your car. When the windows fog, rub with the eraser! Works better than a cloth!

    Reopening envelope. If you seal an envelope and then realize you forgot to include something inside, just place your sealed envelope in the freezer for an hour or two. Viola! it unseals easily.

    Conditioner Use your hair conditioner to shave your legs. It's cheaper than shaving cream and leaves your legs really smooth. It's also a great way to use up the conditioner you bought but didn't like when you tried it in your hair.

    Goodbye Fruit Flies

    To get rid of pesky fruit flies, take a small glass, fill it 1/2' with Apple Cider Vinegar and 2 drops of dish washing liquid; mix well. You will find those flies drawn to the cup and gone forever.!

    Get Rid of Ants Put small piles of cornmeal where you see ants. They eat it, take it 'home,' can't digest it so it kills them. It may take a week or so, especially if it rains, but it works and you don't have the worry about pets or small children being harmed!

    INFO ABOUT CLOTHES DRYERS The heating unit went out on my dryer! The gentleman that fixes things around the house for us told us that he wanted to show us something and he went over to the dryer and pulled out the lint filter. It was clean (I always clean the lint from the lilter after every load of clothes.) He told us that he wanted to show us something; he took the filter over to the sink and ran hot water over it. The lint filter is made of a mesh material...I'm sure you know what your dryer's lint filter looks like. Well...thehot water just sat on top of the mesh! It didn't go through it at all! He told us that dryer sheets cause a film over the mesh that's what burns out the heating unit. You can't SEE the film, but it's there. It's what is in the dryer sheets to make your clothes soft and static free...that nice fragrance too. You know how they can feel waxy when you take them out of the box...well this stuff builds up on your clothes and on your lint screen. This is also what causes dryer units to potentially burn your house down with it! He said the best way to keep your dryer working for a very long time (and to keep your electric bill lower) is to take that filter out and wash it with hot soapy water and an old toothbrush (or other brush) at least every six months. He said that makes the life of the dryer longer.

    Note: I went to my dryer and tested my screen by running water on it. The water ran through a little bit but mostly collected all the water in the mish screen. I washed it with warm soapy water and a nylon brush and I had it done in 30 seconds. Then when I rinsed it...the water ran right thru the screen! There wasn't any puddling at all! That repairman knew what he was talking about!


    Forwarded from Niki

    The letter was sent to the principal's office after the school had sponsored a luncheon for the elderly. An old lady received a new radio at the lunch as a door prize and was writing to say thank you. This story is a credit to all humankind. Forward to anyone you know who might need a lift today.

    Dear Kean Elementary:

    God bless you for the beautiful radio I won at your recent senior citizens luncheon. I am 84 years old and live at the Sprenger Home for the Aged. All of my family has passed away. I am all alone now and it's nice to know that someone is thinking of me. God bless you for your kindness to an old forgotten lady.

    My roommate is 95 and has always had her own radio, but before I received one, she would never let me listen to hers, even when she was napping. The other day her radio fell off the nightstand and broke into a lot of pieces. It was awful and she was in tears. She asked if she could listen to mine, and I told her to kiss my diaper.

    Thank you for that opportunity.



    Forwarded by Professor Edwards (who ought to know)

    Perks of reaching 50 or being over 60 and heading towards 70 AND PLUS!

    01. Kidnappers are not very interested in you.

    02. In a hostage situation you are likely to be released first.

    03. No one expects you to run--anywhere.

    04. People call at 9 pm and ask, did I wake you?

    05. People no longer view you as a hypochondriac.

    06. There is nothing left to learn the hard way.

    07. Things you buy now won't wear out.

    08. You can eat supper at 4 pm.

    09. You can live without sex but not your glasses.

    10. You get into heated arguments about pension plans.

    11. You no longer think of speed limits as a challenge.

    12. You quit trying to hold your stomach in no matter who walks into the room.

    13. You sing along with elevator music.

    14. Your eyes won't get much worse.

    15 . Your investment in health insurance is finally beginning to pay off.

    16. Your joints are more accurate meteorologists than the national weather service.

    17. Your secrets are safe with your friends because they can't remember them either. 18. Your supply of brain cells is finally down to manageable size.

    19. You can't remember who sent you this list.

    And you notice these are all in Big Print for your convenience.

    Forward this to everyone you can remember right now!

    Never, under any circumstances, take a sleeping pill and a laxative on the same night.



    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



    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