The Nasdaq halted trading today and was down for a couple of hours. Listening to the financial media (CNBC, Larry Kudlow, etc.), you would have thought a great crime had occurred. 99 percent of the investing public had no idea and could care less, me included.
What serious investor could possibly be harmed by a two hour shutdown of the Nasdaq? Are these pundits serious? If there was ever an 'inside baseball' issue, this is it. Only manic traders and hedge funds could possibly care one way or another about the Nasdaq shutdown.
No portfolio of any serious investor could possibly be damaged by a temporary shutdown of a stock exchange. This is a ridiculous tempest in a teapot.
Thursday 22 August 2013
Obama and Higher Education
Just what we need, the Obama tenacles reaching into higher education. In typical style, Obama points to a problem -- the high cost of higher education -- and proposes a solution that has nothing to do with the problem and actually will likely make the problem far, far worse than it is now. This has been the pattern with the economic rescue plan, with the 'affordable' health care act, with wind and solar initiatives, and on and on. Every problem that Obama has inherited has become a much bigger problem under his leadership.
What is wrong with higher education? Mainly the government, as in most other things. Federal funding for research grants and student loans has made higher ed less interested in scholarly pursuits and more interested in the pursuit of federal largesse. Students are borrowing huge amounts of money to maintain a college lifestyle that for prior generations was simply unavailable. Who could spend that kind of money on beer and fitness centers in the good old days?
Education itself doesn't cost much to provide; less today than a generation ago thanks to the advent of the digital age. But 'higher education' is no longer in reach for middle income Americans unless they are willing to bankrupt themselves and their children to enrich university bureacrats and aging academics (and they are aging thanks to tenure). There is a growing gap between 'education' and 'higher education.' More and more these two concepts are separate and distinct -- perhaps, incompatible.
Obama is going to measure the inputs to higher education to figure out what the outputs are -- a completely absurd approach to measuring the effectiveness of an education program. Why not measure the difference between a student's life chances when entering the institution with the life chances when leaving the institution. The 'elite' colleges would not fair very well using a measure like that. But, if only inputs are measured -- the Obama plan -- then the elite colleges will do very well indeed (that's why they are called 'elite'), but the community colleges, who fare much better using my measure will not do well under the Obama plan.
Once more, under Obama, the rich get richer and the poor and middle class will be left holding the bag.
What is wrong with higher education? Mainly the government, as in most other things. Federal funding for research grants and student loans has made higher ed less interested in scholarly pursuits and more interested in the pursuit of federal largesse. Students are borrowing huge amounts of money to maintain a college lifestyle that for prior generations was simply unavailable. Who could spend that kind of money on beer and fitness centers in the good old days?
Education itself doesn't cost much to provide; less today than a generation ago thanks to the advent of the digital age. But 'higher education' is no longer in reach for middle income Americans unless they are willing to bankrupt themselves and their children to enrich university bureacrats and aging academics (and they are aging thanks to tenure). There is a growing gap between 'education' and 'higher education.' More and more these two concepts are separate and distinct -- perhaps, incompatible.
Obama is going to measure the inputs to higher education to figure out what the outputs are -- a completely absurd approach to measuring the effectiveness of an education program. Why not measure the difference between a student's life chances when entering the institution with the life chances when leaving the institution. The 'elite' colleges would not fair very well using a measure like that. But, if only inputs are measured -- the Obama plan -- then the elite colleges will do very well indeed (that's why they are called 'elite'), but the community colleges, who fare much better using my measure will not do well under the Obama plan.
Once more, under Obama, the rich get richer and the poor and middle class will be left holding the bag.
Media Misleads Once Again
Reuters has a story today about the jobless claims number that is completely absurd. According to Reuters, "...then new claims... rose...but...gave a positive signal for hiring during the month." This conclusion is based upon absolutely nothing.
What the data, in fact, shows is that jobless claims rose last week and rose more than the market expected -- not good news at all. Worse, the numbers are barely (five percent on average) lower than the numbers in the early part of the year. Given that revisions are typically well above five percent, a drop of five percent is statistically irrelevant.
The real truth is that the economy is not producing enough jobs and the few that are produced are mostly part-time, low wage jobs. Not surprising, given the Obama economic program, which guarantees economic stagnation as far as the eye can see.
The media has made a habit of consistently distorting the truth about the American economy in their cheerleading effort to defend failed policy.
What the data, in fact, shows is that jobless claims rose last week and rose more than the market expected -- not good news at all. Worse, the numbers are barely (five percent on average) lower than the numbers in the early part of the year. Given that revisions are typically well above five percent, a drop of five percent is statistically irrelevant.
The real truth is that the economy is not producing enough jobs and the few that are produced are mostly part-time, low wage jobs. Not surprising, given the Obama economic program, which guarantees economic stagnation as far as the eye can see.
The media has made a habit of consistently distorting the truth about the American economy in their cheerleading effort to defend failed policy.
Read David Stockman
A new book by David Stockman, "The Great Deformation," challenges the current orthodoxy of financial market regulation.
This book is a great read. Don't expect a calm and collected analysis. This book is definitely not calm and collected. Stockman takes on all comers and his style is blatantly polemical. He aims his brickbats at the right and the left as he excoriates the rise of indebtedness, public and private, since the 1960s.
Don't think conservatives get a free ride in this book. They don't. Ronald Reagan and Milton Friedman are targets of Stockman. Indeed, Stockman sees Reagan and Friedman as major culprits in the incredible growth of America's financial liabilities. Some of this is, no doubt, sour grapes for his well-publicized split with the Reagan Administration in the 1980s when Stockman was Director of the Bureau of the Budget. He resigned that post in a feud with the Reagan folks over their unwillingness to support spending reductions to accompany the famous Reagan tax cuts.
But, the heart and soul of Stockman's book is his interpretation of the 2008 financial crisis. Here, Stockman makes a real contribution to what has been an embarassingly simple-minded consensus view of government policy. Stockman argues that the federal government, including the Fed, should not have intervened to save AIG, Morgan Stanley and Goldman Sachs. According to Stockman, saving these firms was the main purpose of the hastily-assembled $ 780 billion bailout backage, known as TARP.
Stockman argues that the financial system and the American economy was not threatened by the collapse of AIG, MS, and GS, as was argued at the time. He shows, by analyzing the balance sheets of these firms, that the American economy could have easily survived the collapse of these firms. Few, today, agree with that, but Stockman makes his case convincingly.
In essence, Stockman is challenging the "too big to fail" crowd that dominates government policy today and that dominated government policy in the Bush Administration in 2008. By challenging a hackneyed consensus devoid of analytical underpinning, Stockman has done a great service, writing this book. He's right. Read his book.
This book is a great read. Don't expect a calm and collected analysis. This book is definitely not calm and collected. Stockman takes on all comers and his style is blatantly polemical. He aims his brickbats at the right and the left as he excoriates the rise of indebtedness, public and private, since the 1960s.
Don't think conservatives get a free ride in this book. They don't. Ronald Reagan and Milton Friedman are targets of Stockman. Indeed, Stockman sees Reagan and Friedman as major culprits in the incredible growth of America's financial liabilities. Some of this is, no doubt, sour grapes for his well-publicized split with the Reagan Administration in the 1980s when Stockman was Director of the Bureau of the Budget. He resigned that post in a feud with the Reagan folks over their unwillingness to support spending reductions to accompany the famous Reagan tax cuts.
But, the heart and soul of Stockman's book is his interpretation of the 2008 financial crisis. Here, Stockman makes a real contribution to what has been an embarassingly simple-minded consensus view of government policy. Stockman argues that the federal government, including the Fed, should not have intervened to save AIG, Morgan Stanley and Goldman Sachs. According to Stockman, saving these firms was the main purpose of the hastily-assembled $ 780 billion bailout backage, known as TARP.
Stockman argues that the financial system and the American economy was not threatened by the collapse of AIG, MS, and GS, as was argued at the time. He shows, by analyzing the balance sheets of these firms, that the American economy could have easily survived the collapse of these firms. Few, today, agree with that, but Stockman makes his case convincingly.
In essence, Stockman is challenging the "too big to fail" crowd that dominates government policy today and that dominated government policy in the Bush Administration in 2008. By challenging a hackneyed consensus devoid of analytical underpinning, Stockman has done a great service, writing this book. He's right. Read his book.
Monday 19 August 2013
Time to Buy Emerging Markets?
Emerging market stocks have been hammered this year as the US and Europe have enjoyed one of the best stock markets in history. Why? What happened to the argument that slow (GDP) growth in the developed world and much higher (GDP) growth in the emerging economies argued in favor of a heavy commitment of investment funds to emerging market?
As it turns out, emerging market economic growth has, indeed, been much, much higher than economic growth in the Western nations. So, why did their stock markets put in such a pitiful performance thus far this year? A similar pattern occurred in US history when foreign investors, mostly British and Russian investors, lost bucketloads of money betting on growth in the US economy in the 19th century. This is not the first time that dramatic GDP growth failed to help investors in public stocks.
Many of the most vibrant companies in the countries that fall into the 'emerging market' category are not public companies. They are privately owned companies that aren't included in any of the emerging market portfolios that you and I can own. Instead, roughly 40 percent of the capitalization of 'emerging market' ETFs are typically government-owned or heavily regulated companies, such as the local telephone company or local utility company. Are these good investment bets in a third world political environment?
If emerging markets boom, you are much more likely to make money owning Coca Cola stock than the stock in the local telephone company in Egypt or Venezuela. The inherent logic behind huge investments in emerging markets never made any sense in the first place.
That said, it may now be time to buy the emerging markets, since everyone seems to be abandoning them in a rush. India's stock market lost four percent of its value in a single day at the end of last week.
It may be time to take another look at emerging markets, now that their staunchest supporters seem to be running for the exits. But, one should be cautious. Emerging markets involve stocks that have fundamentally different characteristics and corporate governance rules than Western investors may be accustomed to.
As it turns out, emerging market economic growth has, indeed, been much, much higher than economic growth in the Western nations. So, why did their stock markets put in such a pitiful performance thus far this year? A similar pattern occurred in US history when foreign investors, mostly British and Russian investors, lost bucketloads of money betting on growth in the US economy in the 19th century. This is not the first time that dramatic GDP growth failed to help investors in public stocks.
Many of the most vibrant companies in the countries that fall into the 'emerging market' category are not public companies. They are privately owned companies that aren't included in any of the emerging market portfolios that you and I can own. Instead, roughly 40 percent of the capitalization of 'emerging market' ETFs are typically government-owned or heavily regulated companies, such as the local telephone company or local utility company. Are these good investment bets in a third world political environment?
If emerging markets boom, you are much more likely to make money owning Coca Cola stock than the stock in the local telephone company in Egypt or Venezuela. The inherent logic behind huge investments in emerging markets never made any sense in the first place.
That said, it may now be time to buy the emerging markets, since everyone seems to be abandoning them in a rush. India's stock market lost four percent of its value in a single day at the end of last week.
It may be time to take another look at emerging markets, now that their staunchest supporters seem to be running for the exits. But, one should be cautious. Emerging markets involve stocks that have fundamentally different characteristics and corporate governance rules than Western investors may be accustomed to.
Wednesday 14 August 2013
European Recovery -- Seriously?
The news services are abuzz this morning with the "news" that Europe has finally turned the corner with an economic rebound in the 2nd quarter of this year. Underneath the headline is the dismal number of an annualized 0.3 percent estimated growth rate for the 2nd quarter. Whoop-to-doo! This is a recovery. This number is not significantly different from a negative number, given the pattern of revisions. Meanwhile, unemployment in Europe remains above 12 percent and sovereign debt is soaring on to new highs.
There are further stories that Greece is on the road to recovery. What are their current statistics? GDP only dropped an annualized four percent in the first half of this year. Wow! That's really something to write home about. Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.
Wonder what the statistics would show if Europe was doing poorly?
There are further stories that Greece is on the road to recovery. What are their current statistics? GDP only dropped an annualized four percent in the first half of this year. Wow! That's really something to write home about. Combined with almost 28 percent unemployment overall and nearly 70 percent unemployment among youth, it sure sounds like Greece is just humming along.
Wonder what the statistics would show if Europe was doing poorly?
Monday 12 August 2013
Some Good News for the US
Steve Moore's column today in the Wall Street Journal is worth a read. The sequester, according to Moore, has worked. Total federal spending has been slowed, even reversed, in the past two years, according to Moore. This is, indeed, good news. Let's hope it continues.
Moore notes that all it takes to continue to hold federal spending in line is to not undo the budget deal that led to the sequester in the first place. It will be interesting to see if politicians can stick with the plan by doing nothing.
Moore notes that all it takes to continue to hold federal spending in line is to not undo the budget deal that led to the sequester in the first place. It will be interesting to see if politicians can stick with the plan by doing nothing.
Update on Greece
Now, after five years of European Union policies, how do things look in Greece. The headline today on Yahoo looks encouraging: "Greece Beats January-July Budget Target." In fact, Greece did not do any such thing. More bailout funds from the EU, though, made it look that way.
Here is what the EU has done for Greece: GDP today is 20 percent lower than it was in 2008, when the EU bailouts began. Unemployment is at a record pace, pushing toward 30 percent. These numbers are not very different from where the US was in 1933 at the lowest point of the Great Depression.
Meanwhile, civil order is breaking down in Greece. Crime is rife and the only things growing are the nation's indebtedness and the black market. Political discourse is moving to the extremes as the center breaks down.
Finally the debt to GDP ratio is rapidly climbing to 200 percent. The EU has made a small problem into a large problem and has obligated the entire European continent to back a bailout that has absolutely no hope of success. Politicians hard at work again!
Here is what the EU has done for Greece: GDP today is 20 percent lower than it was in 2008, when the EU bailouts began. Unemployment is at a record pace, pushing toward 30 percent. These numbers are not very different from where the US was in 1933 at the lowest point of the Great Depression.
Meanwhile, civil order is breaking down in Greece. Crime is rife and the only things growing are the nation's indebtedness and the black market. Political discourse is moving to the extremes as the center breaks down.
Finally the debt to GDP ratio is rapidly climbing to 200 percent. The EU has made a small problem into a large problem and has obligated the entire European continent to back a bailout that has absolutely no hope of success. Politicians hard at work again!
Sunday 11 August 2013
The Changing Face of the American Workplace
The US economy was once the envy of the world. From 1865 to 1965, the US economy grew faster than any large economy in the world. The great American middle class came into prominence during this period and American income and wealth had no rivals anywhere in the world. For most of these years, there was no Federal Reserve or central bank in the United States, though central banks had a long history in every other large country in the world. For most of these years, there was little business regulation and no income tax. The Federal Reserve and the Federal income tax came into existence in 1913, coming on the heels of the best 60 years of economic growth in the history of the US.
Not that everything was rosy. Financial panics and the great depression occurred during this 100 year span. Unemployment rose and fell. Markets rose and fell. The dynamics of American growth were chaotic, though powerful. But, with all of the chaos and panic, the American pie grew at an unprecedented rate, matched, in world history, only by modern China. The standard of living of the average American grew at the fastest pace ever. Unemployment levels above 6 percent were considered a sign of a 'recession.' The current 7.6 percent unemployment rate would have been seen as an extreme economic slowdown (not an economic recovery).
Since 1965, the American economy has grown at a dramatically slower pace. The American middle class has consistently struggled, except for the 20 year period that followed the inauguration of Ronald Reagan. The financial position of the average American is today untenable, if proper account is taken of the federal, state and local government debt. America is headed for financial disaster and the American middle class is sitting in the passenger seat.
In the driver's seat is the new political class. The fastest growing demographic in America is the American government or quasi-government employee. On the defensive is the American private economy. Besieged by so much regulation that most companies are not even aware of most of the regulatory burden that they face, small business is no longer the engine of American economic progress -- government is where the real growth is taking place. Government employment has been the largest source of employment growth in the US economy since 1965.
Unfortunately, government doesn't produce anything but problems for the private sector. Most government employees (including public school teachers, university professors, and bureaucrats of all stripes) view the private sector with suspicion. They see private businesses as quasi-criminal enterprises bent on polluting the environment and exploiting their employees. This culture dominates the media characterizations, not only in the daily news, but in television series and movies.
So what does all of this mean for the workplace in modern America? Private businesses realize that they are the target of the political classes and they make adjustments. They know that if they hire full time employees, their regulatory burden goes up. They know if they hire 50 employees or more, they fall into certain categories that must face significantly higher costs of complying with the modern legal environment that has been imposed upon them.
So, what happens? Small business reacts by hiring as few full time employees as possible. Part time workers are easier to fire and are not subject to Obamacare and other regulatory burdens. Many companies keep their companies deliberately smaller to avoid certain employment trigger levels that put companies under a much more severe regulatory regime. Employees that are 'protected' under current laws -- minorities, women, persons over the age of 55 -- involve far greater expense to a private business than other employees. So, fewer of them are hired. Protecting an employee with legislation simply means making that employee more expensive to the employer. Employers aren't stupid (a common assumption of the political class that supports these 'protections).'
So, today, the workplace is a very rigid bureaucratic environment. The blizzard of paperwork that employees face is nothing compared to the blizzard of paperwork that companies face. There is more concern with what might be said at the water cooler than what the work output might be. Private email communications are now perused for politically incorrect comments. Free speech doesn't apply to the workplace. In financial service companies, mistakes or errors are seen as criminal (the 'whale' episode at JP Morgan is a modern instance). Gone are the old processes of free people making free decisions in free markets. Now you have to worry about whether Barney Frank or Elizabeth Warren is looking over your shoulder.
All of this means that America is in a period of relative economic decline. The middle class will remain an endangered species as the political class bent on the destruction of the middle class continues to claim that all they care about is the middle class. Gradually, less and less of America is based upon free market economics and more and more is driven by un-elected elites, who have spent most of their lives either in politics or academia. The workplace is now a bureaucratic environment with rigid rules and little or no room for initiative and energy. The dull and the routine is more and more a description of the modern American workplace.
The workplace is also becoming more and more a land of part-timers. Businesses in America, like their European counterparts, are increasingly reluctant to hire people that, by law, they cannot fire. Workers now have protections and guarantees that mean, even if workers received no wages at all, they are still very, very costly to business. Increasingly, wages are a smaller and smaller fraction of the costs to an employer of hiring an employee. The result is a much reduced take home pay and more and more of worker income is siphoned off to worthy causes, favored by elite bureacrats in the Elizabeth Warren mold -- bureacrats with virtually no life experiences similar to that of ordinary American workers.
A hundred years ago, a young employee could take a job at a reduced wage or no wage at all as a way of entering the work force and learning a trade. Minimum wage laws, promoted by big unions, are designed to block such work force entrants and preserve a monopoly for existing workers. These laws are effective and help destroy a large part of the Horatio Alger culture that once was. The elite that make these rules don't face such problems since they, by and large, go to elite colleges and universities and find that entry into the work force doesn't involve wage and salaries anywhere near the minimum wage.
It is no accident that college students are in the forefront of the call for a "living wage." A living wage virtually guarantees that the college students will not face future competition from folks whose start in life is not as pampered as their own. The poor simply can't get through the front door, since their skill set rarely justifies a "living wage." Meanwhile, those who support the "living wage' think of themselves as bastions of morality, while crushing the hopes of folks who would simply like to have an opportunity to move up in the world through their own work efforts.
Great wealth creates idle time for the wealthy. It is no accident that the wealthiest US politicians are also those who most vociferously support the agenda of ever bigger government. Why not? It will never effect them. As fewer and fewer Americans derive their living from the free market, the free market has fewer and fewer defenders. The wealthy and the new bureacrats are the power brokers in modern America. Their contempt for the American middle class and for free enterprise is on display every day in our media and in their political program. It has changed the face of America and the American workplace. Meanwhile, folks like Obama ponder why part-time workers are replacing full time workers in America. He blames that on greedy businesses. But, the reality is that Obama policies are one of the key reasons that full time workers are becoming an endangered species.
Not that everything was rosy. Financial panics and the great depression occurred during this 100 year span. Unemployment rose and fell. Markets rose and fell. The dynamics of American growth were chaotic, though powerful. But, with all of the chaos and panic, the American pie grew at an unprecedented rate, matched, in world history, only by modern China. The standard of living of the average American grew at the fastest pace ever. Unemployment levels above 6 percent were considered a sign of a 'recession.' The current 7.6 percent unemployment rate would have been seen as an extreme economic slowdown (not an economic recovery).
Since 1965, the American economy has grown at a dramatically slower pace. The American middle class has consistently struggled, except for the 20 year period that followed the inauguration of Ronald Reagan. The financial position of the average American is today untenable, if proper account is taken of the federal, state and local government debt. America is headed for financial disaster and the American middle class is sitting in the passenger seat.
In the driver's seat is the new political class. The fastest growing demographic in America is the American government or quasi-government employee. On the defensive is the American private economy. Besieged by so much regulation that most companies are not even aware of most of the regulatory burden that they face, small business is no longer the engine of American economic progress -- government is where the real growth is taking place. Government employment has been the largest source of employment growth in the US economy since 1965.
Unfortunately, government doesn't produce anything but problems for the private sector. Most government employees (including public school teachers, university professors, and bureaucrats of all stripes) view the private sector with suspicion. They see private businesses as quasi-criminal enterprises bent on polluting the environment and exploiting their employees. This culture dominates the media characterizations, not only in the daily news, but in television series and movies.
So what does all of this mean for the workplace in modern America? Private businesses realize that they are the target of the political classes and they make adjustments. They know that if they hire full time employees, their regulatory burden goes up. They know if they hire 50 employees or more, they fall into certain categories that must face significantly higher costs of complying with the modern legal environment that has been imposed upon them.
So, what happens? Small business reacts by hiring as few full time employees as possible. Part time workers are easier to fire and are not subject to Obamacare and other regulatory burdens. Many companies keep their companies deliberately smaller to avoid certain employment trigger levels that put companies under a much more severe regulatory regime. Employees that are 'protected' under current laws -- minorities, women, persons over the age of 55 -- involve far greater expense to a private business than other employees. So, fewer of them are hired. Protecting an employee with legislation simply means making that employee more expensive to the employer. Employers aren't stupid (a common assumption of the political class that supports these 'protections).'
So, today, the workplace is a very rigid bureaucratic environment. The blizzard of paperwork that employees face is nothing compared to the blizzard of paperwork that companies face. There is more concern with what might be said at the water cooler than what the work output might be. Private email communications are now perused for politically incorrect comments. Free speech doesn't apply to the workplace. In financial service companies, mistakes or errors are seen as criminal (the 'whale' episode at JP Morgan is a modern instance). Gone are the old processes of free people making free decisions in free markets. Now you have to worry about whether Barney Frank or Elizabeth Warren is looking over your shoulder.
All of this means that America is in a period of relative economic decline. The middle class will remain an endangered species as the political class bent on the destruction of the middle class continues to claim that all they care about is the middle class. Gradually, less and less of America is based upon free market economics and more and more is driven by un-elected elites, who have spent most of their lives either in politics or academia. The workplace is now a bureaucratic environment with rigid rules and little or no room for initiative and energy. The dull and the routine is more and more a description of the modern American workplace.
The workplace is also becoming more and more a land of part-timers. Businesses in America, like their European counterparts, are increasingly reluctant to hire people that, by law, they cannot fire. Workers now have protections and guarantees that mean, even if workers received no wages at all, they are still very, very costly to business. Increasingly, wages are a smaller and smaller fraction of the costs to an employer of hiring an employee. The result is a much reduced take home pay and more and more of worker income is siphoned off to worthy causes, favored by elite bureacrats in the Elizabeth Warren mold -- bureacrats with virtually no life experiences similar to that of ordinary American workers.
A hundred years ago, a young employee could take a job at a reduced wage or no wage at all as a way of entering the work force and learning a trade. Minimum wage laws, promoted by big unions, are designed to block such work force entrants and preserve a monopoly for existing workers. These laws are effective and help destroy a large part of the Horatio Alger culture that once was. The elite that make these rules don't face such problems since they, by and large, go to elite colleges and universities and find that entry into the work force doesn't involve wage and salaries anywhere near the minimum wage.
It is no accident that college students are in the forefront of the call for a "living wage." A living wage virtually guarantees that the college students will not face future competition from folks whose start in life is not as pampered as their own. The poor simply can't get through the front door, since their skill set rarely justifies a "living wage." Meanwhile, those who support the "living wage' think of themselves as bastions of morality, while crushing the hopes of folks who would simply like to have an opportunity to move up in the world through their own work efforts.
Great wealth creates idle time for the wealthy. It is no accident that the wealthiest US politicians are also those who most vociferously support the agenda of ever bigger government. Why not? It will never effect them. As fewer and fewer Americans derive their living from the free market, the free market has fewer and fewer defenders. The wealthy and the new bureacrats are the power brokers in modern America. Their contempt for the American middle class and for free enterprise is on display every day in our media and in their political program. It has changed the face of America and the American workplace. Meanwhile, folks like Obama ponder why part-time workers are replacing full time workers in America. He blames that on greedy businesses. But, the reality is that Obama policies are one of the key reasons that full time workers are becoming an endangered species.
Friday 2 August 2013
Another "European" Jobs Number
162,000 new jobs in July. Not only is that an absurdly low number for an economy as large as the US, the job numbers for both May and June were revised downward as well. No one is much interested in hiring anyone. That's the main message of this report.
A subtext is reflected in the unemployment rate, which fell to 7.4 %. How, if a pitifully low number of jobs are created each month, is the unemployment rate falling? When people give up looking, they aren't counted anymore and more than 6 million have given up looking. Unemployment could get down to 1 percent if almost everyone just gave up and went on public assistance. Is this the Obama plan?
The White House is succeeding in getting the economy that they have wanted -- the European economy -- no growth, no opportunity for the young and ever rising debt levels that have no conceivable way of being repaid. This is the liberal dream.
A subtext is reflected in the unemployment rate, which fell to 7.4 %. How, if a pitifully low number of jobs are created each month, is the unemployment rate falling? When people give up looking, they aren't counted anymore and more than 6 million have given up looking. Unemployment could get down to 1 percent if almost everyone just gave up and went on public assistance. Is this the Obama plan?
The White House is succeeding in getting the economy that they have wanted -- the European economy -- no growth, no opportunity for the young and ever rising debt levels that have no conceivable way of being repaid. This is the liberal dream.
Thursday 1 August 2013
Big Companies More Valuable Than Small Companies
So what explains the surging stock market, when the fundaments of the economy remain weak? Again, micro-factors favor large companies with access to government. This is true for banks as well as for non-financials. Smaller companies are getting hammered by higher tax rates, more mandates, and looming ObamaCare. Large businesses, with some exceptions like coal, can deal with all the bureaucratic regulatory stuff because they have so much scale. Not true for smaller businesses.
So what you're seeing is a change in the playing field. The big guys are doing relatively well and small business is in the doldrums. That is keeping with the Obama playbook of the grand corporate-government teamwork. Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable. But small business is an annoyance in the Obama scheme.
The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate. So folks looking for a job are out of luck. The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.
So what you're seeing is a change in the playing field. The big guys are doing relatively well and small business is in the doldrums. That is keeping with the Obama playbook of the grand corporate-government teamwork. Obama can relate to big giant companies, because they are so much like the government and, in some ways, indistinguishable. But small business is an annoyance in the Obama scheme.
The problem is: small business produces the new jobs for the economy; big business is a stagnant employer in the aggregate. So folks looking for a job are out of luck. The Obama economy is great if you're big and rich, but not so great if you're an out of work American or a small business enterprise.
Wednesday 31 July 2013
Urban Renewal -- The Big Government Way
Having spent the past four days wandering the neighborhoods of Washington DC, it is clear that this city is a prosperous, booming area. Wonder what business enterprises are sparking this growth? Big government.
Years ago, when I was a newbie intern for the US Treasury, walking a couple of blocks from One Washington Circle (where I lived back when it was an apartment complex) was a dangerous undertaking. No More. For miles around, there are now leafy suburbs with casually dressed joggers and dog walkers. The homes are well maintained and coiffed and the comfortable residents seems at ease with their plush surroundings.
Who lives here? The new "protected" class.
These are the people that work for the federal government or the numerous so-called private businesses that devote their endeavors to providing services to government or lobbying to gain a share of government largesse. These are the folks that view people outside the beltway as moronic environment-destroyers and homophobes. They are comfortable in the knowledge that they are doing God's work, protecting the environment and defending the minorities and the poor from the caprices of the evil private sector. These are the regulators, the tax collectors and the righteous -- living high on the taxpayer.
Out in the hinterland, struggling Americans are laboring with massive unemployment and stagnant economies and providing the tax revenues to support this ruling class that lives in modern luxury in much of Washington DC. No real products are produced here. Indeed, the primary function for most of these Washington upper income folks is to find ways to restrict the private sector and to increase the flow of resources into their own pockets. This is the new "European prosperity" for the ruling classes.
You wonder how much longer this can continue. A dwindling private sector carries this elite group on its backs. Meanwhile the poor in DC are shunted off into ghettoes with some of the worst public schools in America. But, those folks are out of the view of this elite. This elite lives in safe neighborhoods with protected jobs. Even folks who take the fifth amendment before Congress, when they are asked about what they are doing, continue to prosper at full pay with zero work responsibilities. This is the liberal dream, right here in Washington DC.
Years ago, when I was a newbie intern for the US Treasury, walking a couple of blocks from One Washington Circle (where I lived back when it was an apartment complex) was a dangerous undertaking. No More. For miles around, there are now leafy suburbs with casually dressed joggers and dog walkers. The homes are well maintained and coiffed and the comfortable residents seems at ease with their plush surroundings.
Who lives here? The new "protected" class.
These are the people that work for the federal government or the numerous so-called private businesses that devote their endeavors to providing services to government or lobbying to gain a share of government largesse. These are the folks that view people outside the beltway as moronic environment-destroyers and homophobes. They are comfortable in the knowledge that they are doing God's work, protecting the environment and defending the minorities and the poor from the caprices of the evil private sector. These are the regulators, the tax collectors and the righteous -- living high on the taxpayer.
Out in the hinterland, struggling Americans are laboring with massive unemployment and stagnant economies and providing the tax revenues to support this ruling class that lives in modern luxury in much of Washington DC. No real products are produced here. Indeed, the primary function for most of these Washington upper income folks is to find ways to restrict the private sector and to increase the flow of resources into their own pockets. This is the new "European prosperity" for the ruling classes.
You wonder how much longer this can continue. A dwindling private sector carries this elite group on its backs. Meanwhile the poor in DC are shunted off into ghettoes with some of the worst public schools in America. But, those folks are out of the view of this elite. This elite lives in safe neighborhoods with protected jobs. Even folks who take the fifth amendment before Congress, when they are asked about what they are doing, continue to prosper at full pay with zero work responsibilities. This is the liberal dream, right here in Washington DC.
Friday 26 July 2013
Guilty Until Proven Innocent
I carry no brief for people that break laws, but, in the securities industry, indictments destroy businesses and innocent shareholders are usually left picking up the tab. That was the result when Drexel Burnham was indicted in 1988. Many of Drexel employees who trudged silently in the back office found their retirement hopes and dreams destroyed when Rudolph Guliani's over-zealous indictment caused Drexel to go bankrupt overnight -- long before anyone produced any evidence to a judge or jury to peruse. Most of the folks who lost their life savings by the indictment of Drexel were innocent and had no knowledge of any wrongdoing. That's what happens when you indict corporations, as opposed to individuals.
This same theme plays out in the litigation and settlement arena. Pension funds who trumpet their lawsuits against corporations are really only suing themselves and enriching the legal profession. The wrongdoers go unscathed, while innocent shareholders get hammered. This is what happened in the tobacco settlements, in the BP settlement, and on and on. Shareholders, who often have no idea that they are really shareholders, find their own retirement hopes and dreams crushed by breast-beating righteous souls who run these pension funds involved in all of this litigation. The lawyers love this as they salt away fortunes. It's simply a transfer from working class people to wealthy lawyers, while pension executives proclaim that they are fulfilling their fiduciary duty.
In the SAC case, why doesn't the government indict individuals? How can a corporation get inside information without an individual being involved? Could it be, they can't prove their case. By simply indicting SAC, they destroy the business and, presumably, a lot of Stevie Cohen's net worth. But, what if Cohen is innocent (and I am not saying that he is). We may never know. What we do know is that SAC is done for, whether innocent or guilty. The indictment will destroy SAC's future and much of Stevie Cohen's net worth, regardless of guilt or innocence.. At least in this case there are no public shareholders being looted -- just Mr. Cohen as far as I can tell. But, still.
What happened to the rule of law?
This same theme plays out in the litigation and settlement arena. Pension funds who trumpet their lawsuits against corporations are really only suing themselves and enriching the legal profession. The wrongdoers go unscathed, while innocent shareholders get hammered. This is what happened in the tobacco settlements, in the BP settlement, and on and on. Shareholders, who often have no idea that they are really shareholders, find their own retirement hopes and dreams crushed by breast-beating righteous souls who run these pension funds involved in all of this litigation. The lawyers love this as they salt away fortunes. It's simply a transfer from working class people to wealthy lawyers, while pension executives proclaim that they are fulfilling their fiduciary duty.
In the SAC case, why doesn't the government indict individuals? How can a corporation get inside information without an individual being involved? Could it be, they can't prove their case. By simply indicting SAC, they destroy the business and, presumably, a lot of Stevie Cohen's net worth. But, what if Cohen is innocent (and I am not saying that he is). We may never know. What we do know is that SAC is done for, whether innocent or guilty. The indictment will destroy SAC's future and much of Stevie Cohen's net worth, regardless of guilt or innocence.. At least in this case there are no public shareholders being looted -- just Mr. Cohen as far as I can tell. But, still.
What happened to the rule of law?
Monday 22 July 2013
Same Ole; Same Ole
So what is the New York Times offering up this morning.
First, European sovereign debt continues to skyrocket to new levels -- both in absolute terms and as a percentage of GDP. Guess the bailout is working, if more debt is the goal. Meanwhile the long running recession in the Eurozone continues unabated with no end in sight.
What about the US? Economists are now busily reloading their economic forecasts, according to the NY Times this morning, to accommodate much slower economic growth in the US than they anticipated previously. The latest consensus forecast -- 1.5 percent. That's barely a pulse.
Meanwhile the same article puzzles over why this is such a jobless recovery. They should be reading my blog.
Here's what they are missing: employers do the hiring. The Times (and the Obama Administration) don't seem to get that. Along with their main cheerleader, Paul Krugman, the Times believes that government borrowing and spending is all it takes to convince someone to hire employees. After five years of this, you would think they would see the folly of their ways.
The coup de grace this morning is, of course, the NY Times' coverage of Detroit. Think of Detroit as a snapshot of the American future -- promises abandoned, hopes crushed, politicians running for cover, unions screaming for justice, and no money left in the till. NY Times can't seem to figure out how Detroit came about (especially while the auto industry's profits are soaring).
Same ole NY Times.
First, European sovereign debt continues to skyrocket to new levels -- both in absolute terms and as a percentage of GDP. Guess the bailout is working, if more debt is the goal. Meanwhile the long running recession in the Eurozone continues unabated with no end in sight.
What about the US? Economists are now busily reloading their economic forecasts, according to the NY Times this morning, to accommodate much slower economic growth in the US than they anticipated previously. The latest consensus forecast -- 1.5 percent. That's barely a pulse.
Meanwhile the same article puzzles over why this is such a jobless recovery. They should be reading my blog.
Here's what they are missing: employers do the hiring. The Times (and the Obama Administration) don't seem to get that. Along with their main cheerleader, Paul Krugman, the Times believes that government borrowing and spending is all it takes to convince someone to hire employees. After five years of this, you would think they would see the folly of their ways.
The coup de grace this morning is, of course, the NY Times' coverage of Detroit. Think of Detroit as a snapshot of the American future -- promises abandoned, hopes crushed, politicians running for cover, unions screaming for justice, and no money left in the till. NY Times can't seem to figure out how Detroit came about (especially while the auto industry's profits are soaring).
Same ole NY Times.
Saturday 20 July 2013
Denial in Detroit
Detroit's problems are not the fault of the decline of the auto industry -- an industry that is, in fact, on a bit of a roll these days. Detroit's problems are the same problems that plague Illinois, California and the US Treasury -- promises paid for with ever increasing levels of promises and debts.
Detroit's problems were compounded by corrupt and incompetent politicians, which are a staple of modern big city government in the US. Citizens vote for these folks, so there is some justice in the fact that these cities are all collapsing fiscally. The absurd notion that taxing a few rich people can solve a city's problems simply matches a similar absurd notion at the national level. (Taxing a few rich people is mainly a way of having rich people move to friendlier places).
No defined benefit pension plan is ever going to survive. Social security is a defined benefit system . It won't survive either. Any system that makes future promises without any means of payment is not going to make it. Detroit is just the beginning; Chicago can't be far behind. And yes, Virginia, you will have your day in the bankruptcy court as well.
All of those defenders of defined benefit systems forgot to ask what happens when there is no money to pay the benefits. Is the great advantage of a professional investment process worth much when the system can't pay the benefits? Even bad investments by individuals in defined contributions systems would have been way better for Detroit pensioners than the outcome that is headed their way.
By the way, it is worth noting that it is not possible to be on a financial loss if you own a typical index fund. Not possible. How's that? Well, as of Thursday's close, the stock market has never been higher.
For all of the villification of Wall Street by the Obama Administration and the media, it turns out that a simple buy-and-hold strategy by ordinary investors is a ticket to wealth that has been and is available to everyone. I bet a lot of Detroiters now wish they had had the opportunity to opt out of the defined benefit system and invest their own money, their own way.
Not to mention that if you have a defined contribution plan and you die, your children can inherit the assets, something that cannot happen with defined benefit and and its twin -- social security.
Just like ObamaCare, promises are made that politicians have no intention of keeping. But, the media pretends that these promises are true. Detroit shows us the reality.
Detroit's problems were compounded by corrupt and incompetent politicians, which are a staple of modern big city government in the US. Citizens vote for these folks, so there is some justice in the fact that these cities are all collapsing fiscally. The absurd notion that taxing a few rich people can solve a city's problems simply matches a similar absurd notion at the national level. (Taxing a few rich people is mainly a way of having rich people move to friendlier places).
No defined benefit pension plan is ever going to survive. Social security is a defined benefit system . It won't survive either. Any system that makes future promises without any means of payment is not going to make it. Detroit is just the beginning; Chicago can't be far behind. And yes, Virginia, you will have your day in the bankruptcy court as well.
All of those defenders of defined benefit systems forgot to ask what happens when there is no money to pay the benefits. Is the great advantage of a professional investment process worth much when the system can't pay the benefits? Even bad investments by individuals in defined contributions systems would have been way better for Detroit pensioners than the outcome that is headed their way.
By the way, it is worth noting that it is not possible to be on a financial loss if you own a typical index fund. Not possible. How's that? Well, as of Thursday's close, the stock market has never been higher.
For all of the villification of Wall Street by the Obama Administration and the media, it turns out that a simple buy-and-hold strategy by ordinary investors is a ticket to wealth that has been and is available to everyone. I bet a lot of Detroiters now wish they had had the opportunity to opt out of the defined benefit system and invest their own money, their own way.
Not to mention that if you have a defined contribution plan and you die, your children can inherit the assets, something that cannot happen with defined benefit and and its twin -- social security.
Just like ObamaCare, promises are made that politicians have no intention of keeping. But, the media pretends that these promises are true. Detroit shows us the reality.
Thursday 18 July 2013
ARTHNEETI JUNE 2013 ISSUE
Gold in India has a special place apart from just an instrument of investment. Indians have a sentimental connection with gold. This is the reason that the gold imports of India show no signs of reduction in spite of all the measures like increase in the import duty. This is worsening the situation of Current Account Deficit (CAD) for the country. CAD is one of the major problems that India is facing today and hence not able to achieve the growth as expected. The depreciating rupee is worsening the situation further. So gold imports are now becoming a problem for the country though they are adding to the assets of the citizens of India. Wednesday 17 July 2013
The 1970s Without the Inflation
We are now entering a long term period of economic stagnation that is reminiscent of the 1970s. The only real difference is that inflation is subdued today. The term "stagflation" came to prominence as a description of the 70s economy, as inflation soared toward the end of the the 1970s. Ronald Reagan rescued us from all of that after his election in 1980. How soon we forget.
Inflation, of course, is only temporarily subdued. The only way to retire our absurd debt levels is to inflate our way out of them. That's coming.
For now, we live in world of never-ending promises of things that cannot possibly come to pass -- medicare, social security, ObamaCare, state and local pension funds. All of these things will run out of funding within the lifetime of those now reaching adulthood. As politicians dream of even more things to promise the citizenry, the funding for the existing promises is rapidly drying up.
Meanwhile, a dwindling percentage of Americans are actually working these days. While records are being set every day in the percentage of Americans on welfare, on food stamps, on disability, the percentage of the economy devoted to the free market is shrinking.
The culture is following suit. Think of the last time that you watched a television show where the bad guy wasn't a businessman or woman -- polluting the environment, stealing from unwitting investors, or fleecing someone in a novel way. Who are the media heroes? -- the government or the non-profit world (or media).
Making a profit is viewed with suspicion in our modern American culture. Unfortunately, that means creating wealth and hiring folks is tainted with the same brush. There is a certain consistency here, since working for a living is losing its hold on the American lifestyle.
Inflation, of course, is only temporarily subdued. The only way to retire our absurd debt levels is to inflate our way out of them. That's coming.
For now, we live in world of never-ending promises of things that cannot possibly come to pass -- medicare, social security, ObamaCare, state and local pension funds. All of these things will run out of funding within the lifetime of those now reaching adulthood. As politicians dream of even more things to promise the citizenry, the funding for the existing promises is rapidly drying up.
Meanwhile, a dwindling percentage of Americans are actually working these days. While records are being set every day in the percentage of Americans on welfare, on food stamps, on disability, the percentage of the economy devoted to the free market is shrinking.
The culture is following suit. Think of the last time that you watched a television show where the bad guy wasn't a businessman or woman -- polluting the environment, stealing from unwitting investors, or fleecing someone in a novel way. Who are the media heroes? -- the government or the non-profit world (or media).
Making a profit is viewed with suspicion in our modern American culture. Unfortunately, that means creating wealth and hiring folks is tainted with the same brush. There is a certain consistency here, since working for a living is losing its hold on the American lifestyle.
Tuesday 16 July 2013
"We're Recovering"
It is now mid-July of 2013, more than 4 1/2 years since the financial collapse and still we hear the phrase: "we're recovering." How long are we going to hear that?
Below 2 percent economic growth and almost 8 percent unemployment means that the US economy is paralyzed. The Obama Administration seems to have thrown in the towel on the subject of growing the economy. Right they should! The Administration policies, piled on top of the policy history of the past fifty years, virtually guarantee that the vibrant economy of the Old USA is not in our future.
There are bright spots -- autos, housing, energy -- but there are always bright spots. What is missing is small business vitality. That's gone and not coming back until folks figure out how to get around the mass of regulations and taxes that bedevil the American economy. Other than outsourcing, it is not clear how to avoid the strangling effect of American regulatory policy. As for employment, hiring anyone seems downright irrational, given current tax and regulatory policies.
The Obama Administration has reduced the expectations of most Americans to the kind of future that Europeans now have -- stagnation, limited opportunity for the young, guarantees for the oldest demographic that are coming apart at the seams, and debts that no one has any intention of honoring.
So the phrase "we're recovering" is getting tiresome. We're not recovering, we're changing. The quasi-socialism that has supplanted free enterprise is preventing a serious recovery like the one we had in the 1980s. The "bad old days" were actually "good old days" as Americans are learning to their dismay.
Below 2 percent economic growth and almost 8 percent unemployment means that the US economy is paralyzed. The Obama Administration seems to have thrown in the towel on the subject of growing the economy. Right they should! The Administration policies, piled on top of the policy history of the past fifty years, virtually guarantee that the vibrant economy of the Old USA is not in our future.
There are bright spots -- autos, housing, energy -- but there are always bright spots. What is missing is small business vitality. That's gone and not coming back until folks figure out how to get around the mass of regulations and taxes that bedevil the American economy. Other than outsourcing, it is not clear how to avoid the strangling effect of American regulatory policy. As for employment, hiring anyone seems downright irrational, given current tax and regulatory policies.
The Obama Administration has reduced the expectations of most Americans to the kind of future that Europeans now have -- stagnation, limited opportunity for the young, guarantees for the oldest demographic that are coming apart at the seams, and debts that no one has any intention of honoring.
So the phrase "we're recovering" is getting tiresome. We're not recovering, we're changing. The quasi-socialism that has supplanted free enterprise is preventing a serious recovery like the one we had in the 1980s. The "bad old days" were actually "good old days" as Americans are learning to their dismay.
Friday 5 July 2013
The Real Message in Egypt
The Egyptian economy has collapsed. This was a process that began with the 'Arab Spring' and accelerated with the election of Morsi, deposed over the weekend by the Egyptian military.
What this shows is that the average Egyptian, Islamist or not, prefers to have food, shelter and safety to political ideology. Democracy doesn't mean much of anything if there are no free institutions.
The US foreign policy is not helpful here, because the US government is busily dismantling free institutions as a cornerstone of its own domestic policy. The US can hardly be expected to promote free institutions -- a free press, for example -- if it doesn't believe in free institutions on its own home turf.
A rule of law would be helpful as well, but current American domestic policy -- witness, the recent suspension of the employer mandate in the Affordable Care Act until elections are safely over -- is mainly a retreat from the rule of law. Actions speak louder than words and the world is plugged in these days.
The right to start a business and provide for your family is all that the average Egyptian wants and the demonstrations that crushed the political power of Morsi were a testament to that desire. Perhaps the Obama Administration should take notes.
What this shows is that the average Egyptian, Islamist or not, prefers to have food, shelter and safety to political ideology. Democracy doesn't mean much of anything if there are no free institutions.
The US foreign policy is not helpful here, because the US government is busily dismantling free institutions as a cornerstone of its own domestic policy. The US can hardly be expected to promote free institutions -- a free press, for example -- if it doesn't believe in free institutions on its own home turf.
A rule of law would be helpful as well, but current American domestic policy -- witness, the recent suspension of the employer mandate in the Affordable Care Act until elections are safely over -- is mainly a retreat from the rule of law. Actions speak louder than words and the world is plugged in these days.
The right to start a business and provide for your family is all that the average Egyptian wants and the demonstrations that crushed the political power of Morsi were a testament to that desire. Perhaps the Obama Administration should take notes.
The Next New Thing
Are you ready for this? How about "unlimited vacations for all." Paid for, of course.
Check out the NY Times editorial page today. These folks have launched their latest job-killing, economy-crushing plan -- unlimited paid vacations.
That should really entice employers to increase their work force. The new idea from the left is to have employees on the payroll who, in reality, are always on vacation.
Check out today's NYTimes editorial page if you think this is a mirage.
Check out the NY Times editorial page today. These folks have launched their latest job-killing, economy-crushing plan -- unlimited paid vacations.
That should really entice employers to increase their work force. The new idea from the left is to have employees on the payroll who, in reality, are always on vacation.
Check out today's NYTimes editorial page if you think this is a mirage.
Thursday 4 July 2013
Affordable Health Care?
The truth on ObamaCare is gradually unfolding. Two things are becoming increasingly clear: 1). Health care provision in the United States is going to deteriorate dramatically in the future because of the 'Affordable Care Act'; and 2). Health care costs in the US are going to escalate dramatically because of the 'Affordable Care Act.'.
You would think that the above two facts are inconsistent, but they aren't. There are a number of parts of the Act that are driving 1) and 2), but they can all be summarized by the following: The "Affordable Health Care Act" promises services but provides no real means of payment. Sound familiar? The same truth is why medicare and social security (and public pension funds) are on a pathway to insolvency.
The Obama Administration's decision to postpone enforcement on the 'large employer' part of the "Affordable Care Act" is an open admission that they don't want the public to see the true costs of the new laws and regulations. Once the elections are past, then, they say, they will enforce the law. The "Act" itself does not provide the Obama Administration with the wiggle room to postpone enforcement, but in the new Obama world of 'selective enforcement' of American law, the Obama Administration announced (in a blog message, no less) that they do not plan to enforce the large employer provisions until elections in 2014 are safely over.
The best health care system is a free market health care system. The insurance industry should be free to offer whatever health insurance plans they wish, to whoever they wish to offer them to.....period.
Concern about the uninsurable can be dealt with in the same manner as is done with auto insurance for drivers that are not normally insurable.
There is no reason for the government to take over the health care industry in the US. Just as with public pension funds and social security, the government promises to take care of its citizens, but, in reality, has made no plans to honor those promises. Ditto for the Affordable Care Act.
You would think that the above two facts are inconsistent, but they aren't. There are a number of parts of the Act that are driving 1) and 2), but they can all be summarized by the following: The "Affordable Health Care Act" promises services but provides no real means of payment. Sound familiar? The same truth is why medicare and social security (and public pension funds) are on a pathway to insolvency.
The Obama Administration's decision to postpone enforcement on the 'large employer' part of the "Affordable Care Act" is an open admission that they don't want the public to see the true costs of the new laws and regulations. Once the elections are past, then, they say, they will enforce the law. The "Act" itself does not provide the Obama Administration with the wiggle room to postpone enforcement, but in the new Obama world of 'selective enforcement' of American law, the Obama Administration announced (in a blog message, no less) that they do not plan to enforce the large employer provisions until elections in 2014 are safely over.
The best health care system is a free market health care system. The insurance industry should be free to offer whatever health insurance plans they wish, to whoever they wish to offer them to.....period.
Concern about the uninsurable can be dealt with in the same manner as is done with auto insurance for drivers that are not normally insurable.
There is no reason for the government to take over the health care industry in the US. Just as with public pension funds and social security, the government promises to take care of its citizens, but, in reality, has made no plans to honor those promises. Ditto for the Affordable Care Act.
Wednesday 3 July 2013
Political Unity Collapses in Portugal
Enforcing austerity doesn't win much popular favor as the politicians in Portugal have discovered. The center right government in Portugal has pretty much collapsed over the weekend. Greece is also back in the news as it struggles to implement its own version of austerity.
No European government backing austerity will survive. Germany's Angela Merkel will be the most prominent casualty as she faces the electorate next year. Gone already are the political leaders of Greece, Spain, Italy, and France. It won't be long before their successors are under siege as well.
The EU-ECB plan of increasing debt and forcing austerity on their populations has been a failure from day one. The political unraveling of Europe was easy to predict and not at all surprising to watch. The fear is that extremists of the far left will eventually assume power and Europe will become a different place.
No European government backing austerity will survive. Germany's Angela Merkel will be the most prominent casualty as she faces the electorate next year. Gone already are the political leaders of Greece, Spain, Italy, and France. It won't be long before their successors are under siege as well.
The EU-ECB plan of increasing debt and forcing austerity on their populations has been a failure from day one. The political unraveling of Europe was easy to predict and not at all surprising to watch. The fear is that extremists of the far left will eventually assume power and Europe will become a different place.
Monday 1 July 2013
China Slows
Asia is beginning to weaken. Given the stagnation in the western economies, this is not good news. Unemployment in the Eurozone remains above 12 percent and US unemployment rates have fallen only because of the massive shift of workers out of the work force. Growth in the West is so slight as to be within the margin of error for measuring the data. The only real global economic strength has been Asia and that may be ending.
Granted there are bright spots in the US -- fewer in Europe. US housing is stabilized and there are pockets of feeding frenzy here and there in the residential market. But, overall, there is still weakness. Now with Obamacare looming and the unleashing of the EPA, things could easily deteriorate in the US.
While everyone watches the Fed, the real story is a micro story. The mass of regulation, rules and additional costs that businesses face, even if demand were to increase, will keep a lid on economic expansion. Debt problems will also limit the future of Western economies. Too many promises, too few resources to deliver on those promises.
Fed activity is mainly important for inflationary expectations and pressures. With a sick economy (made sick by federal policies since 2008), there isn't much inflation. But there will be. That's what the recent uptick in treasury rates is all about.
Granted there are bright spots in the US -- fewer in Europe. US housing is stabilized and there are pockets of feeding frenzy here and there in the residential market. But, overall, there is still weakness. Now with Obamacare looming and the unleashing of the EPA, things could easily deteriorate in the US.
While everyone watches the Fed, the real story is a micro story. The mass of regulation, rules and additional costs that businesses face, even if demand were to increase, will keep a lid on economic expansion. Debt problems will also limit the future of Western economies. Too many promises, too few resources to deliver on those promises.
Fed activity is mainly important for inflationary expectations and pressures. With a sick economy (made sick by federal policies since 2008), there isn't much inflation. But there will be. That's what the recent uptick in treasury rates is all about.
Friday 28 June 2013
Moodys is Right On
Moodys released a report on state pension funds today that implied that such funds currently hold only 48 cents out of every dollar needed to properly fund their obligations. Three cheers for Moodys!
For decades, state and local pension funds have released grossly misleading and inaccurate figures suggesting that they are better funded than is merited by the facts. Politicians have acquiesced in this charade since it was inconvenient, to use Al Gore's phrase, to speak the truth.
The chief method of disguising the truth is to make over-optimistic assumptions about future asset returns and unrealistic assumptions about the contributions that will be forthcoming in the future.
Based upon false information, state and local governments have touted reforms that hardly make a dent in the real problems. Virginia is a great example. The so-called pension fund reforms enacted by the Virginia General Assembly and backed by Governor McDonnell were misleadingly hailed as a 'major' improvement in funding. Nothing could be further from the truth. By maintaining mostly a defined benefit system supported by optimistic and unrealistic assumptions, the Virginia reforms simply locked in concrete a failing system without any serious reform.
The only properly funded pension systems are defined contribution systems. Period. If you are a participant in a defined benefit system (social security is a good example), the best advice for you is to start saving as much as you can. Your pension system is most likely in deep, deep trouble.
For decades, state and local pension funds have released grossly misleading and inaccurate figures suggesting that they are better funded than is merited by the facts. Politicians have acquiesced in this charade since it was inconvenient, to use Al Gore's phrase, to speak the truth.
The chief method of disguising the truth is to make over-optimistic assumptions about future asset returns and unrealistic assumptions about the contributions that will be forthcoming in the future.
Based upon false information, state and local governments have touted reforms that hardly make a dent in the real problems. Virginia is a great example. The so-called pension fund reforms enacted by the Virginia General Assembly and backed by Governor McDonnell were misleadingly hailed as a 'major' improvement in funding. Nothing could be further from the truth. By maintaining mostly a defined benefit system supported by optimistic and unrealistic assumptions, the Virginia reforms simply locked in concrete a failing system without any serious reform.
The only properly funded pension systems are defined contribution systems. Period. If you are a participant in a defined benefit system (social security is a good example), the best advice for you is to start saving as much as you can. Your pension system is most likely in deep, deep trouble.
Thursday 27 June 2013
GDP Revised Downward
Instead of 2.4 percent as originally advertised, the US GDP grew at a revised 1.8 percent during the first quarter of 2013. Consumption spending fell off the cliff, which was unexpected.
So, the stock market rallied...big time. Why? Because the bad economic news suggested that the Fed might continue its bond purchases indefinitely. "Long live QE3" was the rallying cry.
Meanwhile the President and his cronies were busily designing more strategies to lengthen unemployment lines: increase minimum wage, bury the coal industry, continue down the road on Obamacare, push for higher taxes, and stall the Keystone pipeline.
Nothing discourages this White House. They will not likely be satisfied until unemployment gets back into double digit territory (so they can match their heroes in Europe) or until millions more Americans give up on working and move into disability or off into the black market.
On the ObamaCare front, the Administration is now recruiting Hollywood types and NFL superstars to begin a campaign to get young folks to sign up for ObamaCare health insurance, which will cost the 18-25 set roughly twenty times the penalty for not signing up. The premiums for young people are more then ten times what free market insurance would cost them.
There is some justice here, since young folks backed Obama's candidacy in overwhelming numbers. Now, the young will find first hand what it is like to pay to subsidize others. Don't expect the young to buy in. Coffee house conversation is one thing; actually paying for ObamaCare is another. They will not buy in.
Without the youth 'buy-in,' the ObamaCare numbers don't work. But that's okay one supposes, since the so-called insurance exchanges mandated by the law are not in existence anyway. ObamaCare is mostly an idea -- a terrible idea. No one knows what the reality will be because no one in the Obama administration is doing anything significant toward implementation. All of this will slam into the economy as the year progresses.
Between the coming of ObamaCare, higher taxes, the war on the coal industry, and the push for higher minimum wages, don't expect much improvement in the economy. Even housing is going to struggle with the new regulatory environment which makes it border-line criminal for a bank to make a mortgage loan to someone who needs a mortgage loan. Not to mention higher mortgage rates, which zoomed up from 3.7 percent to over 4.5 percent just in the last thirty days.
Meanwhile the stock market moves higher.
So, the stock market rallied...big time. Why? Because the bad economic news suggested that the Fed might continue its bond purchases indefinitely. "Long live QE3" was the rallying cry.
Meanwhile the President and his cronies were busily designing more strategies to lengthen unemployment lines: increase minimum wage, bury the coal industry, continue down the road on Obamacare, push for higher taxes, and stall the Keystone pipeline.
Nothing discourages this White House. They will not likely be satisfied until unemployment gets back into double digit territory (so they can match their heroes in Europe) or until millions more Americans give up on working and move into disability or off into the black market.
On the ObamaCare front, the Administration is now recruiting Hollywood types and NFL superstars to begin a campaign to get young folks to sign up for ObamaCare health insurance, which will cost the 18-25 set roughly twenty times the penalty for not signing up. The premiums for young people are more then ten times what free market insurance would cost them.
There is some justice here, since young folks backed Obama's candidacy in overwhelming numbers. Now, the young will find first hand what it is like to pay to subsidize others. Don't expect the young to buy in. Coffee house conversation is one thing; actually paying for ObamaCare is another. They will not buy in.
Without the youth 'buy-in,' the ObamaCare numbers don't work. But that's okay one supposes, since the so-called insurance exchanges mandated by the law are not in existence anyway. ObamaCare is mostly an idea -- a terrible idea. No one knows what the reality will be because no one in the Obama administration is doing anything significant toward implementation. All of this will slam into the economy as the year progresses.
Between the coming of ObamaCare, higher taxes, the war on the coal industry, and the push for higher minimum wages, don't expect much improvement in the economy. Even housing is going to struggle with the new regulatory environment which makes it border-line criminal for a bank to make a mortgage loan to someone who needs a mortgage loan. Not to mention higher mortgage rates, which zoomed up from 3.7 percent to over 4.5 percent just in the last thirty days.
Meanwhile the stock market moves higher.
Wednesday 26 June 2013
Unilateral Energy Disarmament
As the rest of the world gears up to massively increase their carbon footprint, Obama is moving to put the US out of the coal business. That won't keep worldwide coal production from soaring. It just takes the US out of the coal business. Obama has made no effort at all to get global partners to sign on board. Instead, the US is walking this plank all alone.
This is in keeping with the Obama strategy of strangling the US economy to gain accolades from the Harvard coffee houses.
Once again, American workers will bear the brunt of the Obama agenda. It is not enough to have the worst economic recovery on historical record (at least since 1850). Now, with Obamacare on the horizon, Obama provides one more nail to the coffin of American prosperity with his arbitrary EPA war on the American worker and energy user.
The route to third world status is paved with good intentions and truckloads of hubris.
This is in keeping with the Obama strategy of strangling the US economy to gain accolades from the Harvard coffee houses.
Once again, American workers will bear the brunt of the Obama agenda. It is not enough to have the worst economic recovery on historical record (at least since 1850). Now, with Obamacare on the horizon, Obama provides one more nail to the coffin of American prosperity with his arbitrary EPA war on the American worker and energy user.
The route to third world status is paved with good intentions and truckloads of hubris.
Tuesday 7 May 2013
WHAT WAS YOUR BEST?
In my previous blog posting, I talked about the creation of faculty learning communities as a way to generate conversation about various aspects of teaching/learning/education. At that time, I brought up one of my favorite topics. If you have read this blog for long, you are aware that I am a firm believer that the way you test will strongly influence the way your students learn. If you want to create a different class environment, you need to test differently.
Therefore, in discussing faculty learning communities, I strongly feel that every aspect of testing should be a topic of serious conversation by people who want to become better teachers.
So, today, I have a question for you. I would bet it is a question that you have never been asked before no matter how long you have taught. And, I would argue that it is a question we should be asking all the time. In fact, I think we should have a national contest built around this one question. I believe the answers might well improve college education (which is not a small statement to make).
Here’s the question. Think before you answer.
Whether you teach history, political science, math, accounting, or the like, in your testing during the past semester (or academic year), what was the very best question you asked your class on a test? If testing matters so much, then we should all have some really good questions that we are especially proud of having written. Why did you feel that particular question was so good?
Excellent test questions set the tone for your class: this is what I consider important, this is the way I want you to learn, this is the kind of thinking you should be doing, this is what I want from you rather than memorization. Students need guidance – nothing guides them quite like what they believe will be on the tests.
Okay, so what was my best question for the past semester? As most readers of this blog probably know, I teach accounting at the Robins School of Business at the University of Richmond. We have very bright students who are willing to do as much or as little as you ask of them. It is all about asking. In testing, I want them to know that I am going to ask them for a lot of serious thinking.
One of my courses is Intermediate Accounting II. Most of my students believe that accounting is basically the memorization of set rules that they must apply to particular situations. Many of them are left-brained and love the comfort of those rules. They are not necessarily happy that I want them to think outside of the box.
However, my experience has been that, in real life, accountants are thrown into odd situations almost every day and must use all of their brain cells to figure out what is going on so that they can determine what response is needed.
You can learn the rules for being a medical doctor but the actual application is much more stressful (and interesting).
On my first test this past semester, I wanted to break the students away from the memorization of rules. So, when they opened the test, they discovered that they had an accounting client on the planet Kryptoplasm. The businesses on that planet use a unique set of accounting rules (referred to as Krypto-GAAP). I then presented a variety of situations and described the basic rules found in Krypto-GAAP. I then asked the students to determine the impact of converting the financial statements prepared on that planet into financial statements that could be used in the US (based on US GAAP). For each situation, they had to tell if reported net income would go up or down, whether the reported liabilities would go up or down, and so on.
The students had never seen anything like this which is what I wanted.
What was I trying to accomplish?
--I wanted the students to read the questions carefully. They could not anticipate the accounting rules on the other planet so they had to read the words and think about what those people were doing. I think the ability to read and think through what you are being told is vitally important in solving problems.
--I wanted to downplay the importance of memorization. No matter what you tell a student they will believe that they can prosper by memorizing everything you have said. I wanted no questions that simply asked them to replicate a mechanical rule.
--I wanted them to make judgments as to which rules should have been applied. By describing the weird things that were happening on this planet, they had to step back and think about how those events should be reported. The problem was more than just manipulating numbers.
--Despite being set on a faraway planet, I wanted the students to be placed in a real life situation. Having a client do weird things is no stretch of the imagination. Too many tests have nothing to do with real life and reinforce the student’s suspicions that college classes are just student exercises.
Did I like the results?
Yes, in fact, I liked this question so very well that my second test used the same format (without warning the students).
Yes, in fact, the standard joke in my classes quickly came to be “what would they do in Krypto-GAAP?” which alerted the students to the fact that accounting rules are not set in stone but simply selected at a point in time and place as the most appropriate method.
Did the test question work? I have no hard data but I do know that I had a really good semester in Intermediate Accounting II. My students quickly came to be open to talking about accounting in interesting and theoretical ways. We learned the rules but we didn’t become obsessed with the rules. I think one of the major reasons why the semester went so well was because of the message that I sent out in that first test (and then followed up on in the second test). This question helped show the students the kind of thinking I wanted them to be able to do. The way you test is the way they will learn.
So, what was your best question of the past semester?
Tuesday 30 April 2013
LET'S ACTUALLY TALK ABOUT TEACHING
Assume someone offered you a million dollars to become one of the great college teachers in the world. Given that much incentive, how would you approach the challenge? Well, my plan would be to break teaching down into all of its many basic components and study each one very carefully – looking for ways to make it better. I think you build a better machine by taking it apart so that you can analyze the individual pieces and try to improve each one. However, over the years, I have never actually had anyone suggest this approach as a way of becoming a better teacher. Improvement in teaching is more often talked about in generic ways.
My thought is that you need to select one specific component of your teaching and then focus on it for a while. How can I do this better? In fact, there have been many semesters over my teaching career where I spent the entire time trying to improve one particular aspect of my teaching. Then, the next semester I would choose some other component to study.
Okay, what brought all of this to my mind?
Andy Litteral, one of my friends and colleagues here at the Robins School of Business, gave a presentation two weeks ago describing a couple of “faculty learning communities” with which he has been involved this year. An informal group of faculty members would meet periodically to discuss a general topic (use of the case-study method, for example). They make presentations and discuss what they had discovered in their own explorations of the topic. They can continue to meet for an indefinite period of time until the topic had been exhausted.
I have long argued that many schools need to create a better forum to encourage faculty to discuss the subject of teaching among themselves. Unfortunately, we often wait for an administrator to form an official committee (which can then turn into a lot of work to accomplish very little). Perhaps the faculty should do this for themselves and forget the administration.
As Andy described it, the faculty learning community basically organizes itself (almost like a club) with the goal of examining a topic of interest and thinking about that topic more deeply. Only people who were interested in the topic would join but each member was expected to be an active participant. These community conversations apparently last until everyone feels that they have accomplished whatever is possible.
To me, faculty learning communities seem like a great idea. Obviously, such communities do not have to be about an aspect of teaching but they certainly can be.
After describing the workings of a faculty learning community, Andy broke the group that was present that day into teams of 5-6 faculty members. He asked each to come up with one potential topic to serve as a foundation for a community discussion next fall. That by itself was a great question – what would be a topic worth discussing? What would you like to explore with a group of faculty members?
Being overly opinionated, I suggested that my group discuss one of my favorite topics: student testing. If you have read this blog for long, you know that I always argue that “the way you test is the way the students will learn.” In my opinion, good testing has a very positive impact on student learning.
But what is good testing? Where do you get your questions? Should you reuse questions from year to year? Should you give essays or problems or multiple-choice questions or a combination? How do you test critical thinking skills? Should you give partial credit? Should you provide answer sheets? Should final exams be comprehensive? How do you handle students who complain that the grading was unfair? What happens if a student misses a test?
To me, those questions are all vitally important to doing our jobs well and I would love to be part of a faculty learning community to simply focus on testing for a year. I think that alone would make me a much better teacher.
But what other faculty learning communities could be set up around teaching? Here is where you can break teaching down into its various component parts and analyze each one so very carefully.
--Everyone says classes should be interactive but how do you get all students (and not just an extroverted few) actively engaged in class conversation?
--Preparation is a key for learning but how do you get students to prepare before they walk into your classroom?
--How does a teacher actually go about preparing for a class? What exactly does that entail?
--I am an accounting teacher. How do I help my students learn to write better?
--Schools are supposed to develop critical thinking skills. What exactly is critical thinking and how does a teacher develop that in a class?
--How do you teach classes of over 40 students? How do you teach online courses?
--Educational technology is becoming more and more prevalent. What works best and what doesn’t work as well?
Okay, I could go on forever. But here’s the point: If you really want to get better as a teacher, could you (yes, YOU) pick one of these topics or a similar topic and create your own faculty learning community at your own school? I would think that if you selected any of these topics and got a group of 3-8 interested teachers together to chat periodically and make presentations of what they have done, the entire group would become better teachers in a relatively short period of time.
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Added on May 4, 2013. Someone sent me an article about a law class at the University of Virginia (http://www.law.virginia.edu/html/alumni/uvalawyer/f12/flipped.htm) and I couldn’t help but notice the following sentences about looking at every aspect of teaching the class in order to make each part better: "I put all my materials and my course through an atomizer, and now I'm reassembling the bits in a whole new way," Verkerke said. "I've drawn the guiding principles for this new approach from research on teaching and learning, and from the insights of cognitive psychologists. The overriding goal is to harness the power of 'doing' to promote deeper learning for students."
Saturday 27 April 2013
I HAVE A QUESTION FOR YOU
As I have mentioned, I will be giving a presentation in Anaheim in August at the annual convention of the American Accounting Association. I will be talking about this blog (and, hence, some of my ideas about teaching) for 75 minutes. (When it comes to teaching, I can easily talk for many hours.)
Over the last couple of years, I have written 166 entries on this blog. I think some have been pretty good but others have been rather stupid. In writing and in teaching, that is how it goes. Perfection is never my goal. I like to throw out a lot of ideas and hope that a reasonable number are helpful.
My idea for this presentation in August is that I will talk about some of the blog entries that have been the most helpful to teachers out there in colleges around the world. However, I can only guess at that. So, I would like to enlist some help from YOU.
If you think that any of these 166 essays have been especially interesting or insightful, please let me know. Just drop me a note at Jhoyle@richmond.edu and give me the title.
In teaching, you can usually look in the eyes of the students and know what is working and what is not working. Writing a blog is different -- there are no eyes for me to study, no body language for me to try to interpret. I do get email feedback occasionally but not enough for me to know which essays might have been most beneficial.
If there are one or two of these essays that you think I should discuss out in Anaheim, please let me know. I really would appreciate the help.
Over the last couple of years, I have written 166 entries on this blog. I think some have been pretty good but others have been rather stupid. In writing and in teaching, that is how it goes. Perfection is never my goal. I like to throw out a lot of ideas and hope that a reasonable number are helpful.
My idea for this presentation in August is that I will talk about some of the blog entries that have been the most helpful to teachers out there in colleges around the world. However, I can only guess at that. So, I would like to enlist some help from YOU.
If you think that any of these 166 essays have been especially interesting or insightful, please let me know. Just drop me a note at Jhoyle@richmond.edu and give me the title.
In teaching, you can usually look in the eyes of the students and know what is working and what is not working. Writing a blog is different -- there are no eyes for me to study, no body language for me to try to interpret. I do get email feedback occasionally but not enough for me to know which essays might have been most beneficial.
If there are one or two of these essays that you think I should discuss out in Anaheim, please let me know. I really would appreciate the help.
Friday 26 April 2013
ARTHNEETI MARCH 2013 ISSUE
With the passing of Banking Laws (Amendment) Bill, the RBI has got the power to issue new banking licenses in order to encourage financial inclusion as well as allow for more penetration of banking services to the public. This move is seen as a game changer in the banking sector with India’s largest business houses as well as NBFCs set to apply for new licenses. But, along with this development comes a greater responsibility for RBI to check the credibility and usage of funds by license nominees in order to regulate the function of new banks so that they do not deploy funds to risky assets or for personal business interests.To read more Click here
Tuesday 16 April 2013
WHAT MAKES GREAT TEACHERS GREAT?
Sunday morning, my wife informed me that there was an article in the newspaper that I was really going to find interesting. My wife knows me well so I was immediately intrigued. The article was by Charles F. Bryan, Jr. and was titled “What Makes Great Teachers Great?” And, yes, I was certainly interested.
I found a lot about this essay to be very insightful. I was especially interested to note that it was not written by a faculty member or by an administrator. It was written by one of the leaders of a consulting firm. Often, I believe, we get too close to college education to see it clearly. I liked the idea here of having an outsider come in and study teaching with fresh eyes in order to provide his vision of what makes a great teacher.
Here, the author identifies seven common traits of great teaching. So, I have an assignment for you. Read about these traits and then give yourself a grade on how well you exemplify each of the traits. A is Excellent, B is Good, C is Average, D is Poor and F is Failing.
But don’t stop there. Now, pretend that you are one of your current students – a typical member of your class. For each of those seven traits, try to estimate what grade that student would give you. Try to get into the student’s head and see the class from that perspective.
Average the two grades for each trait and make a list of the seven from highest to lowest.
Identify the two traits with the lowest overall average.
Now you know where to spend some serious time if you (YOU) want to become a great teacher. What can you do over the next 6-12 months to pull those two traits up? It is always hard to improve if you don’t have a specific area or goal in mind. “Try to become a better teacher” is such a generic goal as to be rather useless. This exercise will direct your improvement to specific traits that need work as you move ever onward to become a great teacher.
(This article comes from the April 14, 2013, issue of The Richmond Times-Dispatch and is reprinted with permission from the newspaper)
Last year, our consulting firm assisted Hampden-Sydney College in developing a new strategic plan. Blessed with a dedicated faculty anchored in the liberal arts, Hampden-Sydney places special emphasis on teaching excellence.
Teaching excellence can be defined many ways. One student’s favorite professor may be another’s nemesis. Yet there are certain teachers and college professors who are universally regarded as gifted in their craft.
A surprising number of people who have achieved success in life credit teachers with having opened their minds to new concepts and opportunities. As such “teachers are the most important people in our society,” argues Pulitzer-Prize-winning author David McCullough.
What then constitutes a “great teacher?”
Our work at Hampden-Sydney made me particularly interested in that question. As a result, I interviewed a dozen current and former students from various schools, asking them to describe their favorite teachers or professors.
What made those teachers so good at their craft? The answers varied, but certain common traits emerged, seven in all.
Great teachers seem to possess most of the following qualities:
(1) Love of Their Subject. They love what they teach. That love is obvious and contagious, often rubbing off on students. Many of their students say, for example, “I really didn’t like history until I took his class. Now I love it.”
(2) Vibrant.They are enthusiastic and energetic. Their classes are vibrant and lively, usually punctuated with regular give-and-take with students. Here the teaching process is a two-way street.
(3) Up-to-date.Great teachers have complete command of their subject based on current scholarship, and they know how to present it in organized and understandable ways. There are no yellowed or dog- eared lecture notes in their classes. If they teach in technical fields, they stay up-to-date with constantly changing technology.
(4) Creative.They are creative and help students look at things from different perspectives. They challenge assumptions and help students learn how to think analytically and critically, and to see things in a different light. Virginia’s Standard of Learning testing requirements stifle creative teaching in public schools, according to many critics. A former high school principal, however, told me that the great teachers he knows have adapted to the SOLs and still do a superb job in the classroom.
(5) Demanding.Great teachers usually are not easy teachers. They keep their students on their toes and do not pander to them. Yet they attempt to bring out the best in their students without badgering or humiliating them.
(6) Relevancy.They have the ability to make their subject relevant so that students can see a connection to their own lives and the world around them.
(7) Trust.Their credibility is unquestioned, and they are trusted by their students, who sense that the teacher is honest, forthright and fair.
Great teachers have the ability to change the lives of their students. A friend of mine was drifting aimlessly in college, not sure what she wanted to do. Then she took an elective course in accounting with no real motivation in mind. The professor presented the subject in such an interesting way that my friend was hooked and eventually became an executive at a major accounting firm.
Hampden-Sydney College President Christopher Howard recalls when he initially refused to read “Huckleberry Finn” in high school. As an African-American, he was convinced that it was a blatantly racist and degrading story. But Howard’s English teacher persuaded him to give it a try. Initially reluctant, much to his surprise he found it to be a compelling story that took a scathing look at entrenched attitudes, particularly bigotry. Howard says that because of his teacher’s insistence, he was given a lesson on how to judge for himself and apply critical thinking, both of which serve him well to this day.
David McCullough not only has the rare trait of being a hugely successful writer, but also is one of the most compelling public speakers of our time. He attributes his success at the podium to modeling himself after his art history professor at Yale, whose classes were always packed to overflowing.
In reviewing the traits associated with great teaching, it could be argued that those same characteristics can be applied to any number of jobs outside of the academic world. Whether in sales, law, personnel management, the ministry, the armed services and, yes, even accounting, having enthusiasm, love of one’s profession, integrity, creativity and the ability to motivate others can serve almost anyone well.
People in professions outside the classroom, especially those in leadership positions, can also have a positive influence on those around them, and in that respect, they can be great teachers, too.
The author, Charles F. Bryan Jr., Ph. D., is managing partner of Bryan & Jordan Consulting. He is also president and CEO emeritus of the Virginia Historical Society.
Thursday 4 April 2013
NICE NEWS and GREAT STUDENT ADVICE
I got the nicest email a few days ago from the president of the American Accounting Association: “I am happy to give you some great news: you have been selected as the recipient of the 2013 Innovation in Accounting Education award for your blog, Joe Hoyle: Teaching -- Getting the Most From Your Students. The award was established to foster innovation and improvement in accounting education through ‘significant programmatic changes or a significant activity, concept, or set of educational materials.’”
I was really thrilled.
As a result, I will make a 90 minute presentation on August 7 at the AAA annual meeting in Anaheim. If you are going to be at that conference, I hope you will stop by.
And, I want to thank everyone who reads this blog for helping to spread the word. We have now had 78,000 page views over the years and my guess is that most of those hits came from you guys telling other folks about the blog. So I believe that the above award should be shared with you. Thanks!!!
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For two days last week, Dennis Beresford – the former chairman of the Financial Accounting Standards Board – was on our campus. He gave talks and presentations to several hundred of our students as well as over 100 members of the local accounting community. It was a wonderful couple of days here at the University of Richmond.
At one presentation, a student in the audience asked “What piece of advice would you give to us as college students?” That was a very legitimate question to ask a person who has been so very successful in the business world and as a college educator.
I did not try to write down every word that Mr. Beresford said in response but I did love his answer and I want to paraphrase it here. He paused for a moment and then talked about students often being too interested in focusing on getting 120 hours of nothing but accounting. He spoke about the importance of gaining a broader education and coming to appreciate classes outside of accounting and business.
I wish I could have written down every word because it was a great answer. I could not have agreed more to what he said. A college education should be about creating a foundation for a thoughtful life rather than a quest for a first job. Understanding accounting is, of course, important but college needs to be about more than just making sure the debits equal the credits. If that is all a person wants to learn, life is going to be very dull.
After Mr. Beresford’s talk, I started thinking about how to encourage my students to develop that kind of attitude. I certainly want my students to learn lease accounting and pension accounting but I also want them to appreciate art, literature, and the like. How do you push a student to go outside of his or her comfort zone?
Luckily, registration for the fall semester is coming up so the selection of courses is on everyone’s mind at the moment. I quickly wrote a note to our seniors graduating in accounting and asked each of them to hit reply and tell me the name of the best course they had ever taken at the University of Richmond outside of the Robins Business School. I explained what I wanted to do and asked them to identify that special, non-business course.
Almost immediately, a long list of courses started pouring into my email account. Several students listed multiple courses they would recommend. I had not asked for any type of explanation but many of the students wrote out glowing comments about a particular course and what they had learned.
To me, the list was thoroughly fascinating including such courses as Hebrew Prophets, Justice in Civil Society, The Propaganda State, Minds and Machines, Leadership and Economic Policy, Thomas Jefferson and Revolutionary American, Introduction to Film Studies, Civil Rights and Civil Liberties, Lincoln, Saints and Sinners in Muslim Literature, Elementary Symbolic Logic, Introduction to Environmental Studies, and Global Women Writers.
The list was so interesting that I was ready to go back to college and take many of the courses myself.
Then, I sent an email to all junior accounting majors here at the University of Richmond. I started by discussing what Mr. Beresford had said. Then, I added the entire list of “best courses” and explained that some other student just like them had picked each of those courses as the very best (outside of the Business School) that they had taken in four years here. I strongly encouraged them to look at those courses and consider whether one or more wasn’t worth taking in the coming fall semester.
Did I change any minds? I certainly hope so. Students often need a little encouragement to explore going outside of their comfort zone. But, from my experience, most of them do not need very much encouragement -- a little goes a long way. This whole experiment probably took no more than 45 minutes of my time. But I might have gotten some of our Accounting students to broaden their education a bit. And, that, I think, is a worthy goal. Just like Dennis Beresford suggested.
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