A not-so-funny pictorial description of the AIG bailout

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Thanks to the MBA220 students for their submissions on this one.  I have modified and combined a couple of the submitted pictures here.  If anyone would like to animate this AIG PowerPoint and save it as a movie (I believe it can be done with powerpoint) I would appreciate it.

Fisman: CEO right: Face time needed at Yahoo

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So, as humans we still need to interact face to face? See this article.  Here’s a quote:

More recent time use studies by researchers at Harvard, the London School of Economics and Columbia have found that little has changed. Despite the IT revolution, business leaders still spend 80% of their time in face-to-face meetings.

So, as educators we should be mindful of the push for online content.  A measured approach towards online incorporation is needed to ensure we are training business leaders and not solely customer service representatives.

But then again, somebody has to be a customer service representative, right?  Oh, I don’t have all the answers.  In the end, I applaud the effort to re-humanize the work environment.  May it be successful.

Why Should Taxpayers Give Big Banks $83 Billion a Year?

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This is another article on the downside of “too big to fail.”  After attaining “too big to fail” status, creditors know these banks will be bailed out by the U.S. government if and when they fail.  As such creditors to these large banks have reduced risk exposure.  According to the article, this amounts to about 0.8 percentage points or $83Billion a year that the top 10 banks save every year as a result of their “too big to fail” status.

Why not break these big banks up rather than letting them become too big and failing?

The article: http://www.bloomberg.com/news/2013-02-20/why-should-taxpayers-give-big-banks-83-billion-a-year-.html

 

WSJ: Value Stocks Are Hot—But Most Investors Will Burn Out

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I, as well as Warren Buffett before me, and Benjamin Graham before him, emphasize book value.  This article provides evidence that value stocks outperform growth stocks, but only if you hold firm:

20130215_Why_most_value_investors_will_burn_out

On value indexes vs. others…

…the Russell 1000 Value Index, a yardstick of cheap stocks with sluggish expected earnings, is up 19%, compared with 11% for pricier “growth” stocks and 15% for the full Rus- sell 1000 index of big U.S. stocks.

On long run performance…

Since 1926, value stocks have outperformed growth stocks by an average of four percentage points annually

On book value…

The bargain stocks in the best-known Fama- French index were selected on a different measure: book value, a basic yard- stick of corporate net worth. Many stock pickers don’t pay much attention to book value anymore.

Potential Facebook revenue stream or distraction from underlying economic problem?

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A recent article by The Economist describes how microlenders are using social media to assess creditworthiness.  However a prior article also by The Economist suggests microlending has been discredited.

The real problem, as outlined in Aftershock by Robert Reich, is that lending has expanded because wages of the 99% have remained stagnant or declined. More efficient lending and credit analysis is not what this world needs long term. What we need is wages of the 99% to rise so they do not have to borrow so much.