February 2013 archive

Student Claims C+ Cost Her $1.3 Million

The Morning Call reports that Megan Thode, a graduate student at Lehigh University in Bethlehem, Pennsylvania, claims that the C+ she was given in one of her classes caused her $1.3 million in damages.  Thodes was in the College of Education pursing her master’s in counseling and human services.  As part of the curriculum, Thode …

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China’s changing demographics will dramatically impact the world economy

The International Monetary Fund (IMF) just released a fascinating paper entitled “Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?” The paper explains that Chinese population controls will cause the number of Chinese working adults to peak between 2020 and 2025.  At this point, a “precipitous” drop of working age population will …

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How Much House Can You Afford?

The recent real estate bubble and foreclosure crisis that California faced has left first-time home buyers wondering how much home they can really afford.  With the relatively lower current prices and record low interest rates, the California Association of Realtors (C.A.R.) is suggesting it’s an opportune time to buy.  C.A.R. published the following chart that …

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Proposed improvement in repo accounting

In mid-January 2013, the Financial Accounting Standards Board (FASB) proposed changing financial reporting for repurchase agreements, also known “repos”. FASB is seeking comments on its proposal by March 29. This is FASB’s second change to repo agreement accounting in the last two years. The change indirectly occurs from the poor accounting practices for repo agreements …

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Slow Down When You Eat: Technology Invades The Dinner Table

Eating too quickly has been proven to be bad for health, causing heartburn, digestive problems, and even weight gain. The old method to curb this bad habit was having a mother or a spouse remind us to slow down and “chew your food.” Now with the help of technology, no such verbal reminders are necessary. …

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Does anyone NOT know the key differences between CA versus TX? Anyone…?

Both the business and residential climates in California versus Texas are long known to be diametrically opposed: one is a more progressive state advocating social justice at a “cost” of higher taxes and more regulations while the other espouses lower taxes and less regulations while advocating individual responsibility.   Despite this well-known, long standing difference, Governor Perry of …

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United States Postal Service Cancels Saturday Mail Delivery

On February 6, 2013, the United States Postal Service (USPS) announced that as of the week of August 5, 2013 it will suspend Saturday mail delivery (see: USPS Announcement).  This reduction in delivery is estimated to save the USPS approximately $2 billion annually. Patrick R. Donahoe, Postmaster General and CEO stated: The Postal Service is …

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Survey of Audit Committee Members Indicate Significant Concerns

KPMG recently released their Global Audit Committee Survey (See the KPMG survey here).  The survey contains the views of 1,800 audit committee members worldwide regarding topics such as financial reporting and disclosures, audit quality, oversight of internal and external auditors, risk management and crisis readiness, emerging technologies and audit committee effectiveness. The survey highlighted the …

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CAT’s write-down has lessons for you, too

Caterpillar (NYSE: CAT) purchased ERA Mining Machinery, China’s fourth-largest maker of hydraulic coal mine roof supports in last June 2012, paying $653.4 million. After the deal closed, Caterpillar found accounting fraud. The fraud caused a $580 million write-down, or 87 cents per CAT share in the most recent quarterly earnings report. Caterpillar states that the …

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Fumbling the Interpretation: Statistical Models and the Super Bowl

Predictionmachine.com generated a statistical model for the 2013 Super Bowl that reports a 67% probability of the 49ers winning. The probability of this outcome is different than predicting that the 49ers in fact will win. Yet such simplistic, and incorrect, interpretations are common to  Monte Carlo style models (the type of model run by Predictionmachine.com). …

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