Why I Am Leaving Goldman Sachs Op-Ed

Yesterday, Goldman Sachs executive director Greg Smith resigned from his position and wrote an op-ed in the New York Times to let the world know the reasons for his decision.  Despite the immediate satirical response by comedians, Smith's opinion piece shed light on Goldman Sachs descent from the perspective of an executive.  Here is a selection of quotes that might catch your attention.  

"TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.  To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer." 


Even though only a select few individuals have access to the inner workings of investment banks, many Americans assume greed and manipulation are pervasive on Wall Street.  Why, then, did Smith's public resignation garner great levels of attention?  Smith has nothing to gain from rebuking Goldman Sachs.  He's already a mid-level executive who left his position of Goldman's US derivatives trading for Europe, the Middle East, and Africa.  His intention appears to be a sincere desire to confirm the widely held perception that the financial industry prioritizes profits ahead of customer satisfaction.  


Not surprisingly, a number of parody articles have been written overnight.  The most popular satire thus far is a piece from The Daily Mash titled "Why I Am Leaving the Empire".  In the article, a disgruntled Darth Vader expresses disgust with his employer:


“The Empire is one of the galaxy’s largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.”    


Minyanville writer Michael Comeau has also penned a letter to Goldman CEO Lloyd Blankfein called, "Why I Am Applying for an Executive Director Position at Goldman Sachs".


"Ultimately, however, I believe I have the right attitude for the job.

First of all, I am an awesome dude.

My proudest moments in life -- getting accepted to Brooklyn College, passing Intro to Chemistry, and competing in countless Wiffle-ball and roller-hockey games, known as the Brooklyn Olympics -- were achieved through pure awesomeness, with no shortcuts.

And more importantly, Lloyd, I know how to keep my mouth shut."

Corporate Governance and Generation Y

One of the core purposes of corporate governance is to maximize shareholder value through the elimination and reduction of conflicts of interest between management, the board of directors, and the shareholders.  It follows from this principle that management should consider the interests of shareholders first.  While shareholder maximization theory has its advantages, the downsides associated with this model are rarely discussed.

Last September, a successful businessman spoke to my business fraternity about the millenial generation, which refers to individuals with birth dates ranging from the mid-1970s to the mid-1990s.  In two years, Millennials will account for nearly half the employees in the world.  He characterized us as instant communicators familiar with social networking.  We are more tolerant, expressive, and less religiously observant than our predecessors.  We search for meaning through our professions, viewing work as an inherent part of life, not something we do strictly in exchange for income. 

It will be intriguing to observe how entrenched business practices react as Generation Y climbs the corporate ladder.  The environment, meaningful work, and long-term thinking might conflict with the theory of appeasing grubby shareholders in the short run.  This viewpoint has validity--would you work to maximize value for thousands of remote and impersonal individuals you’ve never met?  Furthermore, what are the implicit costs of shareholder maximization?  

Generation Y has resoundingly expressed that the success of a business should not be measured exclusively by profits.  Innovation and societal development are equally as important as the bottom line.  Businesses that serve society profitably are likely to thrive in a business world run by Generation Y.  An observant person would predict to see a fundamental change how top executives perceive the purpose of business.  Time shall tell.   

Wednesday Wisdom: Inspiring and Motivational Quotes

Sometimes, the wisdom of other perfectly articulates what we feel ourselves.  Powerful quotes can cause us to deeply reflect on our values and beliefs.  It's not the busiest that lead the most fulfilling lives, so take a few moments and read the following words with an open mind and a positive attitude. 

“First they ignore you, then they laugh at you, then they fight you, then you win.” ~ Mahatma Gandhi

“Life isn’t about finding yourself. Life is about creating yourself.” ~ George Bernard Shaw

“There are basically two types of people. People who accomplish things, and people who claim to have accomplished things. The first group is less crowded.”

“I am sorry to write such a long letter. I didn't have time to write a short one.” 

~ Mark Twain

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.” ~ Michelangelo Buonarroti

“Doing what you like is freedom. Liking what you do is happiness.” ~ Frank Tyger

“We act as though comfort and luxury were the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about.”

“Imagination is everything. It is the preview of life’s coming attractions.”

“Any man who reads too much and uses his own brain too little falls into lazy habits of thinking.” ~

“Any intelligent fool can make things bigger and more complex. It takes a touch of genius – and a lot of courage to move in the opposite direction.”

~ Albert Einstein

“I know nothing except the fact of my ignorance.” ~ Socrates

“People, who are crazy enough to think they can change the world, are the ones who do.” ~ Apple Inc.

“You got a dream, you gotta protect it. People can’t do something themselves, they wanna tell you you can’t do it. If you want something, go get it. Period.” ~ Pursuit of Happyness

“Whether you think you can or think you can’t – you are right.” ~ Henry Ford

“Peace comes from within. Do not seek it without.” ~ Buddha

“Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your own common sense.”  ~ Buddha

“But it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward. How much you can take and keep moving forward. That’s how winning is done!” ~ Rocky Balbo

“Don’t let the noise of others opinions drown out your inner voice.” ~ Steve Jobs

“Interviews I conducted with more than 70 CEOs and other leaders point to 5 essentials for success — qualities that most of those C.E.O.’s share and look for in people they hire. They all shared five qualities: Passionate curiosity. Battle-hardened confidence. Team smarts. A simple mind-set. Fearlessness.” ~ New York Times

“Pause now to ask yourself the following question: “Am I dreaming or awake, right now?” Be serious, really try to answer the question to the best of your ability and be ready to justify your answer.” ~ Stephen Laberge

“It is not what we get. But who we become, what we contribute… that gives meaning to our lives.” ~ Anthony Robbins

“Those three things—autonomy, complexity, and a connection between effort and reward—are, most people agree, the three qualities that work has to have if it is to be satisfying.“ ~ Malcolm Gladwell

“A great pleasure in life is doing what people say you cannot do.” ~ Walter Gagehot

“The question isn’t who is going to let me; it’s who is going to stop me.” ~ Ayn Rand

The question you should be asking isn’t, “What do I want?” or “What are my goals?” but “What would excite me?” ~ Tim Ferriss

“The most important actions are never comfortable.” ~ Tim Ferriss

“Slow down and remember this: Most things make no difference.” ~ Tim Ferriss

“Being able to quit things that don’t work is integral to being a winner.” ~ Tim Ferriss

“Slowing down doesn’t mean accomplishing less; it means cutting out counterproductive distractions and the perception of being rushed.” ~ Tim Ferriss

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” ~ Will Smith

“Avoid losers. If you hear someone use the words ‘impossible’, ‘never’, ‘too difficult’ too often, drop him or her from your social network.  ~ Nassim Nicholas Taleb

“So the only way on earth to influence other people is to talk about what they want and show them how to get it.” ~ Dale Carnegie

“Envision, create & believe in your own universe, and the universe will form around you.” ~ Tony Hsieh, Delivering Happiness

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” ~ R. Buckminster Fuller

“It doesn’t matter how one was brought up. What determines the way one does anything is personal power.” ~ Carlos Castaneda

“God, grant me the serenity To accept the things I cannot change; Courage to change the things I can; And wisdom to know the difference.”~ Reinhold Niebuh

“A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects.” ~ Robert A. Heinlein

“Watch your thoughts, they become words. Watch your words, they lead to actions. Watch your actions, they create habits. Watch your habits, they build your character. Watch your character, it becomes your destiny.” ~ Upanishads

“Think about what it feels like when you interact with someone who makes you notice what’s good about yourself (raising your status), who is clear with his expectations of you (increasing certainty), who lets you make decisions (increasing autonomy), who connects with you on a human level (increasing relatedness), and who treats you fairly.” ~ David Rock

“Impossible is just a big word thrown around by small men who find it easier to live in the world they’ve been given than to explore the power they have to change it. Impossible is not a fact. It’s an opinion. Impossible is not a declaration. It’s a dare. Impossible is potential. Impossible is temporary. Impossible is nothing.” ~ Muhammad Ali

“Talent hits a target no one else can hit; Genius hits a target no one else can see.” ~ Arthur Schopenhauer

America in 2012: Economy and Jobs

Last night, I watched a town hall meeting featuring presidential candidate Mitt Romney.  I'd never seen him speak outside of a formal debate, yet his polished demeanor was very impressive.  He came across as genuine and knowledgeable, especially when he spoke about the direction of the US economy.  Now, I am not expressing my endorsement for Mr. Romney quite yet, but his ideas are a step in the right direction to pulling the American economy out of its funk.

During the 2008-2009 recession, the unemployment rate almost doubled from around 5% to 9.8%, and it hovers around 9% as we enter 2012.  Economic policy makers recognized the sharp rise in unemployment and introduced a stimulus package along with an unprecedented rise in government spending.  To spend money, the government took on more debt to the extent that everyone is now wondering whether America will ever be capable of paying down its enormous federal debt.  The increase in the size of government has meant higher tax rates and more regulations on individuals and corporations.  Businesses have cut back on hiring new employees due to uncertainty about the the future of regulations in the economy.    

Instead of accepting responsibility and moving forward, Americans are playing the blame game.  The Occupy Movement has targeted the wealthiest 1% of Americans as those guilty of dampening economic growth.  The argument is that taxing the richest Americans will partially solve the soaring federal debt.  The reality is that the best way to alleviate long-term government deficits is to reduce spending.  Businesses will not want to hire if there is discussion of increasing corporate tax rates or even keeping corporate tax rate around 35%.  Other policy discussions such as repealing the Patient Protection and Affordable Care Act, which has been popularized as Obamacare, have become a subject for debate among Republican candidates.  There is no question that this legislation has frozen hiring as businesses wait to see what economic consequences lie within.  What other legislation has made businesses concerned?  The Dodd-Frank Act was enacted in 2010 to ensure that the financial industry is heavily regulated with new provisions on hedge funds, new definitions of accredited investors, and required reporting by all public companies on the disparity between salaries of the CEO and median employees.  Yet the recent demise of MF Global is a piece of evidence against the success of the the Dodd-Frank Act.    

I certainly don't claim to have all the answers, but I'm not alone in thinking that America cannot take 4 more years of these harmful economic policies.  Letting entrepreneurs create business without worrying about the massive burdens on raising capital is a step in the right direction.  Ending unnecessary and disastrous regulations will also help America as we emerge from this recession.  

Kim Jong Il Dead

Kim Jong Il, the former second-generation dictator of North Korea, died Saturday of heart failure.  He was the General Secretary of the only political party in Korea, Chairman of National Defense, and Supreme Commander of the Korean People’s Army.  Since July 1994, he was without question the most powerful man in North Korea. 

In all likelihood, his unknown third son Jong Un will succeed him as the leader of a country that recently acquired nuclear weapons.  The North Korean economy is among the worst in the world, less than three percent the size of its southern counterpart.  The United Nations and United States have imposed economic sanctions as a result of North Korea’s refusal to abandon its nuclear weapon developments.  In 2009, Kim Jong Il oversaw the testing of a nuclear device and a ballistic missile capable of striking Tokyo.  In 2010, North Korea attacked South Korean naval vessels and shelled South Korean islands, killing soldiers and civilians. 

Last year, Kim Jong Il finalized his succession plan for his son Kim Jong Un to take over.  Jong Un stood at his father’s right side during a military parade the next month, wearing a black suit with a mandarin collar similar to the style worn by his grandfather, the founder of North Korea after World War II.  

Since 1994, Kim Jong Ill and his government created a cult of personality to the nation’s 24 million citizens.  The average income of North Koreans is less than a dollar a day, but they adored their “Dear Leader”.  Yet by most accounts, the early life of the future dictator was anything but grand.  After the elder Kim took power in 1948, Kim Jong Ill’s younger brother drowned and his mother died.  His father remarried and the boy fought often with his stepmother and half-brothers.  By the time he graduated from a university named after his father, he had developed a reputation as a impulsive womanizer who loved fast cars.  

Until the early 1970s, North Korea’s communist economy performed well relative to the capitalist system adopted by rival South Korea.  However, early in Kim’s reign, South Korea’s economy flourished while North Korea remained hesitant to open the country to the open market.  Kim consistently ignored advice to open the nation to tourism, citing the concern that tourists would be able to identify North Korea’s defense system.  When Kim took power in 1994, Russia and other communist countries on the Eastern European bloc had shed communism and no longer sent foreign aid to Kim’s government.  That meant China was the remaining source of international commerce, accounting for 83% of North Korea’s foreign trade operations in 2010 according to the Seoul-based Korea Trade and Investment Promotion Agency.

30 Business Quotes

 

Whether you are a third grader operating a lemonade stand or the CEO of a Fortune 500 company, you can always use the wisdom of others to improve yourself.  Here's a list of 30 thought-provoking business quotes to use at your next presentation or to simply reflect upon.

1. The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.

– Nolan Bushnell

2. Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.

– Norman Schwarzkopf

3. I had to make my own living and my own opportunity! But I made it! Don’t sit down and wait for the opportunities to come. Get up and make them!

– C.J. Walker

4. A man should never neglect his family for business.

– Walt Disney 

5. The only limits are, as always, those of vision.

– James Broughton 

6. Your most unhappy customers are your greatest source of learning.

– Bill Gates 

7. If there is such a thing as good leadership, it is to give a good example.

– Ingvar Kamprad

8. Yesterday’s home runs don’t win today’s games.

– Babe Ruth 

9. No enterprise can exist for itself alone. It ministers to some great need, it performs some great service, not for itself, but for others.. or failing therein, it ceases to be profitable and ceases to exist.

– Calvin Coolidge 

10. Hire character. Train skill.

– Peter Schutz

11. Whatever the mind of man can conceive and believe, it can achieve. Thoughts are things! And powerful things at that, when mixed with definiteness of purpose, and burning desire, can be translated into riches.

– Napoleon Hill

12. I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.

 – Robert Bosch

13. In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later.

– Harold Geneen

14. I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well.

– Alan Greenspan

15.  You need to be aware of what others are doing, applaud their efforts, acknowledge their successes, and encourage them in their pursuits. When we all help one another, everybody wins.

– Jim Stovall

16. Whether you think you can or whether you think you can’t, you’re right!

– Henry Ford

17. Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes.

– Bill Gates

18. Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business.

– Zig Ziglar

19. For every sale you miss because you're too enthusiastic, you will miss a hundred because you're not enthusiastic enough.

-Zig Ziglar

20. Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.

-Jack Welch

21. To open a shop is easy, to keep it open is an art.

-Chinese Proverb

22. You have to know accounting. It's the language of practical business life. It was a very useful thing to deliver to civilization. I've heard it came to civilization through Venice which of course was once the great commercial power in the Mediterranean. However, double entry bookkeeping was a hell of an invention.

-Charlie Munger 

23. A cardinal principle of Total Quality escapes too many managers: you cannot continuously improve interdependent systems and processes until you progressively perfect interdependent, interpersonal relationships.

-Stephen Covey

24. Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight.

-Henry Luce

25. Do more than is required. What is the distance between someone who achieves their goals consistently and those who spend their lives and careers merely following? The extra mile.

-Gary Blair

26. Every day I get up and look through the Forbes list of the richest people in America. If I'm not there, I go to work.

-Robert Orben

27. Some men see things as they are and say "Why?".  I dream of things that never were and say "Why not?".

-George Bernard Shaw

28. Minds are like parachutes, they only function when they are open.

-Sir James Dewar

29. The difference between tax avoidance and tax evasion is the thickness of a prison wall.

-Denis Healey

30. Happiness is a positive cash flow.

-Fred Adler

"It Wasn't Your Baby"

 

There were two warring tribes in the Andes, one that lived in the lowlands and the other high in the mountains. The mountain people invaded the lowlanders one day, and as part of their plundering of the people, they kidnapped a baby of one of the lowlander families and took the infant with them back up into the mountains.

The lowlanders didn't know how to climb the mountain. They didn't know any of the trails that the mountain people used, and they didn't know where to find the mountain people or how to track them in the steep terrain.

Even so, they sent out their best party of fighting men to climb the mountain and bring the baby home.

The men tried first one method of climbing and then another. They tried one trail and then another. After several days of effort, however, they had climbed only several hundred feet.

Feeling hopeless and helpless, the lowlander men decided that the cause was lost, and they prepared to return to their village below.

As they were packing their gear for the descent, they saw the baby's mother walking toward them. They realized that she was coming down the mountain that they hadn't figured out how to climb.

And then they saw that she had the baby strapped to her back. How could that be?

One man greeted her and said, "We couldn't climb this mountain. How did you do this when we, the strongest and most able men in the village, couldn't do it?"

She shrugged her shoulders and said, "It wasn't your baby."

Tax Return Confusion

Last week, the Congress committee responsible for cutting the deficit failed to reach an agreement on how to address U.S. fiscal woes.  Some individuals on the so-called Supercommittee have championed the idea of reducing America’s massive debt by raising taxes on businesses and individuals.  However, because the group remains so divided, the implications of inaction present some serious question marks for American taxpayers.

At the end of 2011, several sections of tax law are set to expire:
Alternative Minimum Tax Patch
Alternative minimum tax (AMT) is imposed on wealthy taxpayers.  In late 2010, an AMT “patch” reduced the number of people subject to the AMT from 20 million to 4 million.  This provision will expire at the end of 2011.
 
Charitable contribution of IRA assets
In 2013 and beyond, deductions you can take for charitable donations is uncertain.  Several proposals to reduce the amount wealthy individuals can deduct for charitable contributions are brewing in Washington D.C.  The Pease limit which disallows 3% of total itemized deductions is set to return in 2013.  For the rest of 2011, donors over the age of 70.5 can contribute up to $100,000 of IRA assets to qualified charities.  This gift is excluded from income.  If Congress fails to act soon, this popular provision will expire for 2012 and beyond.

Despite the uncertainty surrounding expirations at the end of 2011, there are a few things American taxpayers can bank on.  In 2013, a new net investment income tax of 3.8% is set to become law.  Investment income encompasses interest, dividends, rents, some annuities, and capital gains.  This tax will affect taxpayers with adjusted gross incomes exceeding $250,000.

Currently, the maximum rate on long-term capital gains is 15%, but as an investor, you can time gains and losses to minimize your tax liability.  Up to $3,000 of long-term capital losses can be deducted against ordinary income per year.  If the loss is in excess of $3000, the remaining amount can carry forward to offset income in future years.  If a stock in your portfolio isn’t performing well, you can cash out and use the loss to offset current or future gains.  Then, if the losing stock has good long-term prospects, you can repurchase the stock after taking the loss.  However, you want to avoid a common technique called “wash sales” in which the same investment is acquired fewer than 30 days before or after a sale.  The IRS will not allow you to deduct losses if it deems activity as a wash sale.

Unreimbursed medical expenses are deductible, but only if they exceed 7.5% of a taxpayer’s adjusted gross income.  To exceed the 7.5% fence, some taxpayers group their deductions into one year. 

Kyle Speed

 

In high school, I worked with an impressive young man from Seattle, Washington.  He was a soft-spoken manager yet his presence commanded respect.  On the court in our recreational basketball leagues, he displayed an exceptional ability to score, record assists, and keep team morale lofty.  Off the court, his optimistic attitude and words of encouragement turned a mundane high school job into an enjoyable experience.

The young man I’m writing about has a name--Kyle Speed.  He is now the starting point guard and a student at Grand Canyon University in Phoenix, Arizona.  In addition to balancing the responsibilities of a student-athlete, Kyle makes sure he is there for his wife Bree and their two young children.  

Life presents hurdles to all of us, but Kyle has overcome mountains to get where he is today.  In his early childhood, Kyle, his mother and three sisters stayed in homeless shelters across Seattle.  After his father left the Speed family, they fell upon tough financial times, and bounced around from shelter to shelter, even staying at homes for battered women on occasion.  The family relied on food kitchens for meals and sought out charities for clothing. 

Eventually, the family was placed in a two-bedroom apartment as a part of the Seattle Emergency Housing program.  Kyle slept on the couch, but had a chance to harness his basketball skills on the apartment’s court.  When his mom graduated from vocational school and started a job as a dental assistant, the family moved out of the shelter and Kyle went on to excel in football and basketball at Lake Washington High.  However, Kyle hadn’t completely emerged from the immaturity of youth.  After just a semester at Bellevue Community College, he dropped out as heavy marijuana use consumed his life. 

As the struggles continued, he got a job at a childcare facility, but was taken aback by the number of older people on the premises.  Kyle saw what could happen to himself if he continued down the road he was on, and decided to rededicate himself to academics and the game of basketball.  The environment in Seattle didn’t provide him with many opportunities, so he relocated with Bree--his high school girlfriend--to Kansas, where she had family.  Kyle took on two jobs, which was where he entered my life.  As a manager on duty at a fitness club and an employee at a sporting goods store, Kyle attempted to support himself and Bree while he searched for a junior college that would let him play basketball and attend classes.  After nearly a year and no interest from local schools, he enrolled at Johnson County Community College in Overland Park to work towards an associate’s degree.  While there, he decided to attend an open basketball tryout, a decision that changed his life for the better.  The coaches liked what they saw and invited him to join the team as a walk-on.  Faced with the daunting task of getting playing time at one of the best junior college basketball programs in the country, Kyle outworked his teammates and earned a spot in the starting lineup on opening day of the season. 

Not even a torn ACL was enough to slow Speed down.  During his sophomore season, he averaged 14.1 points and 4.8 assists per game, and shortly after, he received a call from Grand Canyon University.  Meanwhile, Kyle married Bree and is now the proud father of Kyle, Jr.  After Kyle took a recruiting visit to Arizona, he was impressed with the on-campus housing and opportunities for his family, and eventually accepted an offer to play basketball at GCU.

Life has really turned around 180 degrees for the Speed family.  Last year, Bree gave birth to their second child, and she now has a job at GCU.  Kyle also works in the Student Contact Center to earn extra income for his family.  The demands of basketball, school, work, and holding a family together are enough to make any man sweat, but Kyle performs his duties with a smile on his face.  He’s a shining example of hard work, commitment, and devotion.  I wish him the best, and I hope he realizes the lasting, positive impact he has left on the people he has touched.

Pay It Forward

If you have never seen the film Pay It Forward, it’s worth your time to watch.  Based on the best-selling novel of the same name by Catherine Ryan Hyde, the film received mostly negative reviews from film critics for being emotionally manipulative and a sales pitch for the Pay It Forward Movement.  Despite the unfavorable reception of the film, the concept of ‘pay it forward’ is a brilliant one that outlines how an ordinary person like you or me can make a positive difference in this world. 

Paying It Forward is a boundless commitment to do good deeds without expecting anything in return.  If someone does a nice thing for you, you “pay it forward” by performing an act of kindness for someone else.  If the person you helped asked how to pay you back, simply tell them to “pay it forward”.

Although paying it forward is a straightforward concept, here are a few tips to get you headed in the right direction.

Always Look For Opportunities To Help Someone 
This mission can be difficult because we live in an era of precise scheduling and overcommitment.  Much of our time is occupied with work, school, shopping, and everything else.  Of course, there will always be small opportunities to help an elderly neighbor carry out the trash, or picking up the tab for a friend’s lunch.  However, if you want to make a bigger impact, budget time into your busy schedule for community service.  Make a regular habit out of searching for chances to make other’s lives better.

Don’t Expect Much In Return 
Paying it forward does not involve any compensation other than the feeling that you performed an act of kindness for a fellow human being.  It’s about helping make the world a friendlier place.  To be selfless means to get nothing in return.  I'm not sure this pure altruism is possible.  When you give money to a beggar, don’t you get happiness or satisfaction in return?  I think so, and if you helped another person while achieving happiness, you made the world a better place.   

Don’t Forget To Spread The Word
If, in the course of your random acts of kindness, someone wants to repay you, that is “pay it back”, explain to them the concept of “paying it forward”.  Tell them you’d like them to do something nice for three people in lieu of payment to you.  The idea is to exponentially increase the goodness in the world.

MF Global and the Risky World of Derivitives

On Halloween, MF Global filed for bankruptcy in a move that will liquidate the brokerage unit after problems arising from investments in European bonds.  According to BankruptcyData.com, the bankruptcy is the seventh-largest in US history, and the company is the first American victim of the European sovereign debt crisis.  On October 25, the firm reported a $191.6 million quarterly loss as a result of trading European government bonds.  Quickly after this news was released, credit rating agency Moody and Fitch downgraded the company’s corporate credit rating to junk, a grade associated with ultra-high risk. 

Despite knowing the troublesome waters MF Global was treading in, PriceWaterhouseCoopers (PwC), MF Global’s auditors, never issued a going concern opinion in which accountants express doubts about the company’s ability to remain in business.  This is surprising given an auditor’s responsibility to evaluate whether a company can continue to operate.

MF Global experienced four years of massive losses, severely negative free cash flows for three of the last four years, an unhealthy exposure to the European debt markets, and several downgrades in the corporate credit ratings, yet no going concern opinion was issued by PwC.  In addition, MF’s debt-to-equity ratio was approximately 30-1, based on $40 billion of assets and just $1.4 billion of equity.  Perhaps part of the reason is that MF Global could have disguised its debt levels by temporarily slashing obligations before issuing its financial statements each quarter.  A report from the Wall Street Journal suggests MF Global participated in “window dressing”, a technique in which a company misleads shareholders by not reporting the true levels of risk in its investments. 

Furthermore, window dressing masks the actual levels of risk and borrowing of a financial institution. For instance, third quarter of 2010, MF’s short-term borrowings were reported at $18.7 billion, but those loans peaked at $28.4 billion (34% higher) during the period. 

On Friday, Jon Corzine stepped down as MF Global’s chairman and chief executive after reports surfaced about the whereabouts of $633 million of missing customer money.  A former executive at Goldman Sachs from 1994 to 1999, Corzine described his departure from MF as difficult.  He joined MF Global in March 2010 after serving as a U.S. Senator and governor of New Jersey. 

The downfall of MF Global is a sober reminder of what can happen when a firm takes aggressive, risky bets in one market using excessive leverage.  Investors lost trust in the company, and credit nearly evaporated.  Somewhere along the line, MF Global either ignored or failed to implement risk management controls, and it came back to haunt them on Halloween.  However, the writing on the wall was evident long before the day of Jack-O-Lanterns.

Speaker Review: Tony Batman

As a part of my Accounting 303 class one year ago, I was privileged enough to listen to a reputable professional in the field of accounting.  Two weeks ago, I returned to hear Tony's annual talk to the Accounting 303 students again.  Stephen "Tony" Batman is a visionary entrepreneur whose accomplishments have vastly impacted the accounting and financial services professions.  He was voted one of the most influential accountants in America by Accounting Today magazine for 13 straight years, and he is a frequent speaker on financial services topics and a leader in wealth management.

Tony is chairman, CEO, and co-founder of 1st Global, a financial services firm that offers business development advice to leading tax, accounting, and law firms.  In addition to being a Certified Public Accountant, Tony is a Charted Financial Analyst, and a Certified Financial Planner.  Because Tony is a graduate of the University of Kansas, he serves on the board of advisors to the School of Business and also gives talks to students on occasion.

I was first impressed with Tony when he walked around the auditorium, shaking hands and asking each student who had arrived early questions about themselves and their major.  One year ago, he asked me where my home was and what my major is.  When I told him I was majoring in accounting, he said I had made a wise choice.

He started off his presentation with an inspiring statement, "I am the person I am today because of three things: the books I have read, the places I went, and the people I met."  He went on to say he is an average guy with insatiable curiosities.  He then established rapport with the crowd by saying that when he was in college, he was overwhelmed by "choice anxiety", or being unable to choose a major.  He was caught in what he dubbed "the opportunity wedge".

At this point, I was expecting him to ramble on about his accolades and achievements.  I was proved wrong when he said that all of us seek three things in life: happiness, significance, and lives of meaning.  Needless to say, this statement captured my interest.  

Although Tony had some excellent insights to share, I was disappointed and confused by a few of his statements.  First, he claimed adrenaline is the cement of memory.  Does this mean the more ramped up we are, the more we will remember?  It is difficult to retain much information when overcome with anxiety or excitement.  Second, he claimed to be a strong supporter of Ayn Rand, the Russian-American novelist and dubious philosopher. Ayn Rand's philosophy is not philosophy, but pseudo-philosophy.  In her writing, Rand ignores the basic tenets of logic and ethical reasoning by claiming that unfettered capitalism is the only moral social system.  Third, he asserted that by listening to him, we could internalize his own experiences and make them our own.  Empathy only can take a human mind so far.  As my world religions instructor put it, "Words limit the experience".   Eventually, you will have to actually go to a place or have a particular experience to get the essential knowledge you want.  

He then transitioned into the topic of education.  At this point, he asked the audience what the purpose of education is.  One year ago, I raised my hand and when he called on me in a class of over 300 students, I said, "To expand our knowledge and to expand our opportunities."  He agreed entirely.  After a few more answers from the audience, he said the purpose of a professional education in the school of business is to master the language of business, which is accounting.

Next, Tony changed gears and spoke about the real business world.  He said Wall St. and the "real economy" are often demonized by politicians and journalists.  In fact, it is business and commerce that have solved more of society's problems than government he stated.  He said the highest form of compassion a human being can have is to start a business because jobs are created and livelihoods are enhanced.  He went on to say that if you want to prove your value to society, you do that by consistently solving complex problems for others.

I want to draw attention to just how much truth the content in the preceding paragraph contains.  Think about the drugs we take, the products we buy.  Almost everything we own was developed by innovative, visionary people and companies working with the aid of the free market to market, produce, and sell their inventions.  When the government intervenes in an economy to a great degree, the prices of goods and quantity of goods produced in a given market are both thrown out of equilibrium.  Thus, there are shortages and surpluses.  One does not need to look further than the Soviet Union for an example of how price-fixing can result in starvation of a citizenry.

He then went into great detail about his own personal journey to successful CEO of 1st Global.  In short, he started as a farm boy in a Kansas town near Salina.  He attended KU and majored in business.  Upon graduation, he applied for jobs at all of the Big 8 accounting firms and was hired by Arthur Anderson in 1979.  From there, he became the Vice President of a real estate company, then switched over the private sector for another V.P. job.  After that, he decided he wanted to start his own business in 1992.  He said the most valuable lesson he learned in his career is that honoring your promises you make to people is the anchor of happiness.  Then, he said as an entrepreneur, he is often asked the question of where his inspiration comes from.  His answer is simple: lots and lots of experience and reading constantly.  He also mentioned that courage is important.  Here is a quote, "All great living is caused by never playing the coward's role."

After Tony finished his presentation, there was a brief question and answer session that lasted about 15 minutes.  The first question was whether accounting is a time-consuming profession.  His answer was absolutely yes.  He said he spent 3,000 hours a year working at his first job at Arthur Anderson and gained a plethora of experiences.  The next question was what he looks for in an interview.  Tony responded by saying that the most selfish words a person can use in an interview is to inquire how this job will help your career.  Second, the best question an interviewee can ask is, "How can I contribute to this company?"

All things considered, the good messages in Tony's talk far outweighed the confusing parts.  I am fortunate to have listened to such a highly regarded and well-respected professional.  What impressed me far more than anything else was his attempt to connect with his audience by taking the time to personally introduce himself to the students who had arrived early.  My takeaway: you can be inspired on Friday mornings. 

9/11 Pictures

Today marks the ten years since the terrorist attacks of September 11, 2011 caused so much grief and suffering.  Children lost parents.  Husbands lost wives.  Many individuals should also be remembered for their heroism and bravery in helping those affected by the attacks.  Because a picture is worth a thousand words, today's post will contain the most powerful photos I could find of September 11, 2011.

 

 

Remnants of United Flight 93 that crashed in Pennsylvania

Before and After Comparison

 

The pictures of those that lost their lives on 9/11

A Sincere Thank-You To Philadelphia Mayor Michael Nutter

Finally, a community leader not afraid to tell the truth at the expense of appearing politically incorrect!

If you’ve been keeping up on current events recently, you know that there have been a string of mob attacks in the city of Philadelphia.  Using text messages and Twitter, these mobs have assaulted tourists and looted departments stores in Center City, an upscale shopping district in Philadelphia.  The “flash mobs”, as they are being referred to as, have been common, with the unruly packs of African-American juveniles targeting individuals in the heart of the City of Brotherly Love.  

The Mayor of Philadelphia Michael Nutter, dished out a dose of tough love earlier this week.  Mr. Nutter, who is an African-American himself, made his points loud and clear from the pulpit at his local Baptist church on Sunday:

“Take those doggone hoodies down, especially in the summer.  Pull your pants up and buy a belt ‘cause no one wants to see your underwear or the crack of your butt.

If you walk into somebody’s office with your hair uncombed and a pick in the back, and your shoes untied, and your pants half down, tattoos up and down your arms and on your neck, and you wonder why somebody won’t hire you?  They don’t hire you ‘cause you look like you’re crazy.  You have damaged your race.”

Mr. Nutter correctly asserted that the problem starts with the parents.  He admonished parents for sending checks and giving money without spending time with their kids, calling them “human ATMs”.  He then called men who don’t even provide financial support “sperm donors”.  

Not only is Mr. Nutter calling out these gang members and parents for their actions, he is also introduced measures to deal with the disturbances:

-He’s beefing up the police in certain neighborhoods and enlisting volunteers to help.

-He’s imposed a 9 PM curfew for anyone under the age of 18, unless out with a parent or guardian, to be continued until the start of school.

-He’s introduced a series of escalating fines for parents of children caught on the street after the curfew.

-He’s extended the hours of 20 city recreation centers.

There have been some questions about the costs incurred to implement these initiatives.  The city of Philadelphia has been able to minimize the costs of these measures due to an outpouring of support from community leaders and other individuals getting actively involved against the mobs.  “This is not just a police department issue or problem, and it will not be solved just by the police department. This is a community issue.”

My thoughts on the concerns of increased costs in a tough economy--the monetary costs of the preventative steps are far less than the impact to Philadelphia’s reputation (and medical expenses) when an innocent pedestrian gets his skull fractured by a disruptive teenage mob.