Tidbits Quotations
To Accompany the November 28, 2012 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

President Obama is "Rockefeller Republican in blackface."
Cornell West, Professor of Philosophy and Christian practice at Union Theological Seminary at Princeton University
"Did Obama Let the Left Down?" by Tom Bartlett, Chronicle of Higher Education, November 18, 2012 ---

Cornell West --- http://en.wikipedia.org/wiki/Cornell_West

Having sex with your biographer is more fun than having sex with your autobiographer.
David Petraus (not really)

After the 2012 elections only 10 of the U.S. states have bipartisan control. The remaining 40have single-party dominance of the executive and legislative branches.

After the 2012 elections 40 of the 50 states will have single-party control of both the executive and legislative branches of state government.  However, the degree of control in the legislature varies. Passing legislation is nearly always more difficult in states with very large legislatures. For example, the sparsely populated New Hampshire has 400 Representatives, each of whom represents 3,300 residents on average. The populous State of California has only 80 representatives, each of whom represents nearly 500,000 residents on average. One of the reasons New Hampshire has no sales or income tax is that it's so difficult to pass new taxes among 400 Representatives, most of whom represent anti-tax districts no matter the party affiliation of the Representatives. In comparison Vermont's 150  Representatives and California's 80 Representatives creatively tax everything under the sun.

"States Choose Own Paths With One-party Governments," by Michael Barone, Townhall, November 26, 2012 ---

. . .

Starting next month, Americans in 25 states will have Republican governors and Republicans in control of both houses of the state legislatures. They aren't all small states, either. They include about 53 percent of the nation's population.

At the same time, Americans in 15 states will have Democratic governors and Democrats in control of both houses of the state legislatures. They include about 37 percent of the nation's population.

. . .

The Republican edge is largely a result of the Republican trend in 2009 and 2010. Normally, you would expect the Democrats to recoup and shift the balance the next time they have a good off-year. Maybe they will in 2014.

But what's striking now is the wide margins in legislatures for one party or the other in state after state -- most of them, in fact.

According to the National Conference of State Legislatures, Republicans will have more than 60 percent of the members of both legislative houses in 17 states (Nebraska has a single nonpartisan legislature). And in nine more states, they'll have 60 percent of the members of one house plus a majority in the other and the governorship.

Democrats will have 60 percent plus of both houses in 11 states, and in two more they will have 60 percent in one house, a majority in the other plus the governorship.

This is true even in presidential target states. The Ohio Senate will be 23-10 Republican, the Florida House 74-46 Republican.

This trend to one-party control seems likely to have two consequences -- one of interest to political scientists and pundits, and the other to the larger public.

Pundits and political scientists will start to identify the chief conflicts being played out not so much in battles between the two parties -- like the struggle over public employee bargaining in Wisconsin -- but increasingly within the parties.


Continued in article

Stanford “Election 2012” Course Draws to Close with a Post Portem and Predictions ---

Worth a quick mention: Stanford’s Election 2012 course (previously mentioned here) wrapped up with a post-mortem. It starts with Steve Schmidt, a former John McCain and George W Bush advisor, giving a fairly blunt assessment of where the Republican Party stands right now. (The video above starts with his assessment.) Then Tom Steyer, an asset manager, philanthropist and environmentalist active in Democrat politics, explains why Obama’s victory is the product of trends (not necessarily healthy ones) already seen in California politics for the past decade. And Simon Jackman, a Stanford prof immersed in polling, shows why data matters and Nate Silver (538 blog) got things right.

The rolling conversation is moderated by David Kennedy (Pulitzer Prize-winning historian), Rob Reich, and Jim Steyer. We’ve provided YouTube links to the remaining lectures below. You can also find them on iTunes. Plus we’ve  catalogued Election 2012 in our collection of 550 Free Online Courses.

Bob Jensen's threads on free courses, videos, tutorials, and course materials from prestigious universities ---

Video: Nobel laureate and Stanford Professor Myron S. Scholes says some countries are likely to leave the euro so they can become more competitive.
Myron Scholes is also one of two Nobel laureates brought down by the largest hedge fund failure in history (what PBS Nova called The Trillion Dollar Bet) ---

Jensen Question
Can the same theory apply to having California leave the dollar zone?

Futurity --- http://www.futurity.org/

Futurity features the latest discoveries by scientists at top research universities in the US, UK, Canada, and Australia. The nonprofit site, which launched in 2009, is supported solely by its university partners (listed below) in an effort to share research news directly with the public.

Jensen Comment
This site has considerable liberal bias, especially in the Society and Culture tab. But this is not entirely bad for readers having an open mind that can tolerate some of the propositions at this site. For example, an article is inclined to blame international banks for environmental destruction without proper recognition that government's authority for saving the ecosystem to the private sector, but the responsibility still remains with government because of all the externalities of environmental protection and economic well being ---

But don't look to any counterbalancing conservatism studies favoring markets and small government at this site.

"How Free Speech Died on Campus A young activist describes how universities became the most authoritarian institutions in America," by Sohab Ahmarik, The Wall Street Journal, November 16m 2012 ---

At Yale University, you can be prevented from putting an F. Scott Fitzgerald quote on your T-shirt. At Tufts, you can be censured for quoting certain passages from the Quran. Welcome to the most authoritarian institution in America: the modern university—"a bizarre, parallel dimension," as Greg Lukianoff, president of the Foundation for Individual Rights in Education, calls it.

Mr. Lukianoff, a 38-year-old Stanford Law grad, has spent the past decade fighting free-speech battles on college campuses. The latest was last week at Fordham University, where President Joseph McShane scolded College Republicans for the sin of inviting Ann Coulter to speak.

"To say that I am disappointed with the judgment and maturity of the College Republicans . . . would be a tremendous understatement," Mr. McShane said in a Nov. 9 statement condemning the club's invitation to the caustic conservative pundit. He vowed to "hold out great contempt for anyone who would intentionally inflict pain on another human being because of their race, gender, sexual orientation, or creed."

To be clear, Mr. McShane didn't block Ms. Coulter's speech, but he said that her presence would serve as a "test" for Fordham. A day later, the students disinvited Ms. Coulter. Mr. McShane then praised them for having taken "responsibility for their decisions" and expressing "their regrets sincerely and eloquently."

Mr. Lukianoff says that the Fordham-Coulter affair took campus censorship to a new level: "This was the longest, strongest condemnation of a speaker that I've ever seen in which a university president also tried to claim that he was defending freedom of speech."

I caught up with Mr. Lukianoff at New York University in downtown Manhattan, where he was once targeted by the same speech restrictions that he has built a career exposing. Six years ago, a student group at the university invited him to participate in a panel discussion about the Danish cartoons depicting the Prophet Muhammad that had sparked violent rioting by Muslims across the world.

When Muslim students protested the event, NYU threatened to close the panel to the public if the offending cartoons were displayed. The discussion went on—without the cartoons. Instead, the student hosts displayed a blank easel, registering their own protest.

"The people who believe that colleges and universities are places where we want less freedom of speech have won," Mr. Lukianoff says. "If anything, there should be even greater freedom of speech on college campuses. But now things have been turned around to give campus communities the expectation that if someone's feelings are hurt by something that is said, the university will protect that person. As soon as you allow something as vague as Big Brother protecting your feelings, anything and everything can be punished."

You might say Greg Lukianoff was born to fight college censorship. With his unruly red hair and a voice given to booming, he certainly looks and sounds the part. His ethnically Irish, British-born mother moved to America during the 1960s British-nanny fad, while his Russian father came from Yugoslavia to study at the University of Wisconsin. Russian history, Mr. Lukianoff says, "taught me about the worst things that can happen with good intentions."

Growing up in an immigrant neighborhood in Danbury, Conn., sharpened his views. When "you had so many people from so many different backgrounds, free speech made intuitive sense," Mr. Lukianoff recalls. "In every genuinely diverse community I've ever lived in, freedom of speech had to be the rule. . . . I find it deeply ironic that on college campuses diversity is used as an argument against unbridled freedom of speech."

After graduating from Stanford, where he specialized in First Amendment law, he joined the Foundation for Individual Rights in Education, an organization co-founded in 1999 by civil-rights lawyer Harvey Silverglate and Alan Charles Kors, a history professor at the University of Pennsylvania, to counter the growing but often hidden threats to free speech in academia. FIRE's tactics include waging publicity campaigns intended to embarrass college administrators into dropping speech-related disciplinary charges against individual students, or reversing speech-restricting policies. When that fails, FIRE often takes its cases to court, where it tends to prevail.

In his new book, "Unlearning Liberty," Mr. Lukianoff notes that baby-boom Americans who remember the student protests of the 1960s tend to assume that U.S. colleges are still some of the freest places on earth. But that idealized university no longer exists. It was wiped out in the 1990s by administrators, diversity hustlers and liability-management professionals, who were often abetted by professors committed to political agendas.

"What's disappointing and rightfully scorned," Mr. Lukianoff says, "is that in some cases the very professors who were benefiting from the free-speech movement turned around to advocate speech codes and speech zones in the 1980s and '90s."

Today, university bureaucrats suppress debate with anti-harassment policies that function as de facto speech codes. FIRE maintains a database of such policies on its website, and Mr. Lukianoff's book offers an eye-opening sampling. What they share is a view of "harassment" so broad and so removed from its legal definition that, Mr. Lukianoff says, "literally every student on campus is already guilty."

At Western Michigan University, it is considered harassment to hold a "condescending sex-based attitude." That just about sums up the line "I think of all Harvard men as sissies" (from F. Scott Fitzgerald's 1920 novel "This Side of Paradise"), a quote that was banned at Yale when students put it on a T-shirt. Tufts University in Boston proscribes the holding of "sexist attitudes," and a student newspaper there was found guilty of harassment in 2007 for printing violent passages from the Quran and facts about the status of women in Saudi Arabia during the school's "Islamic Awareness Week."


At California State University in Chico, it was prohibited until recently to engage in "continual use of generic masculine terms such as to refer to people of both sexes or references to both men and women as necessarily heterosexual." Luckily, there is no need to try to figure out what the school was talking about—the prohibition was removed earlier this year after FIRE named it as one of its two "Speech Codes of the Year" in 2011.

At Northeastern University, where I went to law school, it is a violation of the Internet-usage policy to transmit any message "which in the sole judgment" of administrators is "annoying."

Conservatives and libertarians are especially vulnerable to such charges of harassment. Even though Mr. Lukianoff's efforts might aid those censorship victims, he hardly counts himself as one of them: He says that he is a lifelong Democrat and a "passionate believer" in gay marriage and abortion rights. And free speech. "If you're going to get in trouble for an opinion on campus, it's more likely for a socially conservative opinion."

Consider the two students at Colorado College who were punished in 2008 for satirizing a gender-studies newsletter. The newsletter had included boisterous references to "male castration," "feminist porn" and other unprintable matters. The satire, published by the "Coalition of Some Dudes," tamely discussed "chainsaw etiquette" ("your chainsaw is not an indoor toy") and offered quotations from Teddy Roosevelt and menshealth.com. The college found the student satirists guilty of "the juxtaposition of weaponry and sexuality."

"Even when we win our cases," says Mr. Lukianoff, "the universities almost never apologize to the students they hurt or the faculty they drag through the mud." Brandeis University has yet to withdraw a 2007 finding of racial harassment against Prof. Paul Hindley for explaining the origins of "wetback" in a Latin-American Studies course. Indiana University-Purdue University Indianapolis apologized to a janitor found guilty of harassment—for reading a book celebrating the defeat of the Ku Klux Klan in the presence of two black colleagues—but only after protests by FIRE and an op-ed in these pages by Dorothy Rabinowitz.

What motivates college administrators to act so viciously? "It's both self-interest and ideological commitment," Mr. Lukianoff says. On the ideological front, "it's almost like you flip a switch, and these administrators, who talk so much about treating every student with dignity and compassion, suddenly come to see one student as a caricature of societal evil."

Continued in article

Ann Coulter --- http://en.wikipedia.org/wiki/Ann_Coulter

Michael Moore --- http://en.wikipedia.org/wiki/Michael_Moore

I'm not a huge Ann Coulter fan, and I seriously do not recall ever quoting her on the AECM or on my Website. However, the article below illustrates another way progressives on campus in the past are silencing conservative voices on campus. It's not just that the conservatism speakers that are being silenced, it's a message to conservative students that they should not be advocating conservatism.

It's OK to invite Michael Moore but not Ann Coulter.

It's not so much that both Coulter and Moore often violate the principles of good scholarship. The point is why is Moore so easily invited by liberal students on campus and Coulter repelled so often by faculty and administration on college campuses?

"A Different Ann Coulter Debate," by Scott Jaschik, Inside Higher Ed, November 12, 2012 ---

Bob Jensen's threads on liberal biases in the media and academe ---

"Moving Further to the Left," by Scott Jaschik, Inside Higher Ed, October 24, 2012 ---

Academics, on average, lean to the left. A survey being released today suggests that they are moving even more in that direction.


Among full-time faculty members at four-year colleges and universities, the percentage identifying as "far left" or liberal has increased notably in the last three years, while the percentage identifying in three other political categories has declined. The data come from the University of California at Los Angeles Higher Education Research Institute, which surveys faculty members nationwide every three years on a range of attitudes.


Here are the data for the new survey and the prior survey:

  2010-11 2007-8
Far left 12.4% 8.8%
Liberal 50.3% 47.0%
Middle of the road 25.4% 28.4%
Conservative 11.5% 15.2%
Far right 0.4% 0.7%


Gauging how gradual or abrupt this shift is complicated because of changes in the UCLA survey's methodology; before 2007-8, the survey included community college faculty members, who have been excluded since. But for those years, examining only four-year college and university faculty members, the numbers are similar to those of 2007-8. Going back further, one can see an evolution away from the center.


In the 1998-9 survey, more than 35 percent of faculty members identified themselves as middle of the road, and less than half (47.5 percent) identified as liberal or far left. In the new data, 62.7 percent identify as liberal or far left. (Most surveys that have included community college faculty members have found them to inhabit political space to the right of faculty members at four-year institutions.)


The new data differ from some recent studies by groups other than the UCLA center that have found that professors (while more likely to lean left than right) in fact were doing so from more of a centrist position. A major study in 2007, for example, found that professors were more likely to be centrist than liberal, and that many on the left identified themselves as "slightly liberal." (That study and the new one use different scales, making exact comparisons impossible.)


In looking at the new data, there is notable variation by sector. Private research universities are the most left-leaning, with 16.2 percent of faculty members identifying as far left, and 0.1 percent as far right. (If one combines far left and liberal, however, private, four-year, non-religious colleges top private universities, 58.6 percent to 57.7 percent.) The largest conservative contingent can be found at religious, non-Roman Catholic four-year colleges, where 23.0 percent identify as conservative and another 0.6 percent say that they are far right.


Professors' Political Identification, 2010-11, by Sector

  Far left Liberal Middle of the Road Conservative Far right
Public universities 13.3% 52.4% 24.7% 9.2% 0.3%
Private universities 16.2% 51.5% 22.3% 9.8% 0.1%
Public, 4-year colleges 8.8% 47.1% 28.7% 14.7% 0.7%
Private, 4-year, nonsectarian 14.0% 54.6% 22.6% 8.6% 0.3%
Private, 4-year, Catholic 7.8% 48.0% 30.7% 13.3% 0.3%
Private, 4-year, other religious 7.4% 40.0% 29.1% 23.0% 0.6%


The study found some differences by gender, with women further to the left than men. Among women, 12.6 percent identified as far left and 54.9 percent as liberal. Among men, the figures were 12.2 percent and 47.2 percent, respectively.


When it comes to the three tenure-track ranks, assistant professors were the most likely to be far left, but full professors were more likely than others to be liberal.


Professors' Political Identification, 2010-11, by Tenure Rank

  Far left Liberal Middle of the Road Conservative Far right
Full professors 11.8% 54.9% 23.4% 9.7% 0.2%
Associate professors 13.8% 50.4% 24.0% 11.5% 0.4%
Assistant professors 13.9% 48.7% 25.9% 11.2% 0.4%


So what do these data mean?


Sylvia Hurtado, professor of education at UCLA and director of the Higher Education Research Institute, said that she didn't know what to make of the surge to the left by faculty members. She said that she suspects age may be a factor, as the full-time professoriate is aging, but said that this is just a theory. Hurtado said that these figures always attract a lot of attention, but she thinks that the emphasis may be misplaced because of a series of studies showing no evidence that left-leaning faculty members are somehow shifting the views of their students or enforcing any kind of political requirement.

Continued in article

"Noam Chomsky Spells Out the Purpose of Education," by Josh Jones, Open Culture, November 2012 ---

Bob Jensen's threads on liberal biases in the media and academe ---

Leaning to the Left in the Academy:  Generalization to Specialization Impacts on General Education "Smorgasbord" of Requirements

"Moving Further to the Left," by Scott Jaschik, Inside Higher Ed, October 24, 2012 ---

Academics, on average, lean to the left. A survey being released today suggests that they are moving even more in that direction.

Obviously the pushing out of conservatism varies between instructors, courses, curricula, and universities, but one of the noteworthy impacts not discussed much is the replacement of generalized economics courses in the Gen Ed requirements and elective smorgasbord of seminars in the common core.

Stanford Introductory Seminars ---

For example note those Introductory Seminar courses in Economics

There are many other Introductory Seminar courses taught by many departments on the Stanford Campus. See the course index beginning on --- Page  123 of the above pdf catalog of Introductory Seminar courses for the 2012/13 academic year at Stanford University. When scanning all those Introductory Seminar courses I conclude the following

  1. The majority of courses are not obviously political at all and hence do not necessarily lean to the left.
  2. Among the courses that I would deem partly or entirely political, I suspect all are hot button topics of liberals such as those dealing with inequality, welfare, feminism, African American women, African American social movements, ecology, environmentalism, human rights, race, etc.

My Main Points
Prior to the 1990s, the common curriculum in virtually all universities for the first two years was mostly comprised of generalized overview courses and introductory courses to many of the disciplines in which students could choose to major and/or minor. Since the 1990s most universities are following the leads of top schools like Harvard and Stanford by replacing many of the generalized overview courses in the common curriculum with what normally would've been more specialized advanced courses further down the road in a given major.

The goal of replacing general overview common core courses with a smorgasbord of specialized and narrowly-focused seminars is generally to stimulate young minds to think more creatively about enormous societal issues early on and to get away from traditional "common core" understandings to be shared by virtually all undergraduates.

But the smorgasbord of choices comes at a price.
The most heavy price is that the common building blocks leading into intermediate and advanced courses in a major have been pushed further up the education ladder, thereby forcing those intermediate courses to teach more basic things and advanced courses to teach more intermediate things.

For example, the following two mathematics Introductory Seminar courses dramatically illustrate my point:

Having these two discussion math seminars in the first or second year of college may set the gray cells to thinking, but they are not basic introductory courses for math, science, or engineering majors who must take math-related intermediate and advanced courses that follow in their chosen majors. Not all majors (including math majors) will choose either of these courses from among the vast smorgasbord of other Introductory Seminar courses. Hence, instructors of intermediate and advanced courses in any discipline cannot really build upon these seminars since most of the students in their courses will not have even had either one of those Introductory Seminars. That's the price of having a smorgasbord instead of a more rigid menu.

Another price is that it's possible for a graduating seniors to share almost nothing in common. A few graduates may be experts on Shakespeare while most others have not learned a single thing about Shakespeare since they were in high school. A few may be experts on the U.S. Constitution while most others have never studied one line of the Constitution after four or five years of college. A few may graduate having studied poetry extensively while most others managed to graduate from college without having studied a single poem.

Perhaps this is as it should be, but I often wonder whether such Introductory Seminars are more the product of faculty turf wars as much as curriculum interests of the students. But I will not speculate further down this avenue.

I also suspect that theories of conservatism are not given a fair shake in any of Stanford's introductory seminars. But I will not speculate further down this avenue.

Bob Jensen's threads on higher education controversies are at


Coal is Still King, Sober Look, November 19, 2012 ---


"Banks Need Long-Term Rainy Day Funds: Accounting rules prevent banks from building loss reserves until shortly before a bad loan is actually written off. That's just too late," by Eugene A. Ludwig and Paul A. Volcker, The Wall Street Journal, November 16, 2012 ---

Governments around the world are taking bold steps to minimize the likelihood of another catastrophic financial crisis. Regulators and financial institutions already have their hands full, so the bar for adding anything to the agenda should be high.

However, one relatively simple but critically important item should move to the top of the list: reforming the accounting rules that inexplicably prevent banks from establishing reasonable loan-loss reserves. If reserve rules had been written correctly before 2008, banks could have absorbed bad loans more easily, and the financial crisis probably would have been less severe. It is now time, before the next crisis, to recognize that reality.

Loan-loss reserves get far less attention than capital or liquidity requirements, which are subject to specific government regulations. Nevertheless, the "Allowance for Loan and Lease Losses" should be an essential part of assessing the safety and soundness of any bank. The ALLL—not Tier 1 capital or even cash-on-hand—is the most direct way a bank recognizes that lending, including necessary and constructive lending, entails risk. Those risks should be recognized in both accounting and tax practices as a reasonable cost of the banking business.

However, banks are now only allowed to build their loan-loss reserves according to strict accounting conventions, enforced by the Securities and Exchange Commission. Reserves have to be based on losses that are strictly "incurred," in effect shortly before a bad loan is written off. Bankers have been prohibited from establishing reserves based on their own expectations of future losses.

The practical result is that in good times real earnings are overrated. Conversely, the full impact of loan losses on earnings and capital is concentrated in times of cyclical strain.

Why have accounting conventions created this perverse result? Some accountants claim that giving banks flexibility with their reserves is bad because it lets bankers "manage earnings"—that is, to raise or lower results from quarter to quarter to look better in investors' eyes. This is a weak argument, because the ALLL reflects a banking reality, and the allowance itself is completely transparent.

No one is misled when sufficient disclosures exist. The size of the bank's reserve cushion will be on the balance sheet, and it would need to be recognized as reasonable by auditors, supervisors and tax authorities. Importantly, from a financial policy point of view, reserves will tend to be countercyclical, likely to discourage aggressive lending into "bubbles" but helping to absorb losses in times of trouble.

Capital is vital to the safety and soundness of banks. It is the ultimate and necessary protection against insolvency and failure. However, permitting a more flexible allowance for loan-loss reserve, an approach that gives banks and prudential regulators the right to exercise reasonable discretion to build a more flexible cushion in case of loss, is a must. Accounting rules need to change to permit this to happen.

Mr. Ludwig, the CEO of Promontory Financial Group, was Comptroller of the Currency from 1993 to 1998. Mr. Volcker, former chairman of the Federal Reserve System, is professor emeritus of international economic policy at Princeton University.


"FASB Will Propose New Credit Impairment Model," by Anne Rosivach, AccountingWeb, October 16, 2012 ---

How to measure and disclose evidence that a loan or bond is not performing continues to be an issue in the ongoing deliberations of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The two boards have been working on a single, converged Accounting for Financial Instruments standard for years.
FASB announced recently that it will separately issue an exposure draft, possibly by the end of 2012, of a new model for disclosing credit impairment. The draft of the new approach, which FASB calls the "Current Expected Credit Loss Model" (CECL Model), may be viewed in FASB Technical Plan and Project Updates. The CECL Model applies a single measurement approach for credit impairment. 
FASB developed the CECL Model in response to feedback from US stakeholders on the "three-bucket" credit impairment approach, previously agreed upon by the FASB and the IASB. US constituents found the three-bucket approach hard to understand and suggested it might be difficult to audit. 
The IASB continues to propose the three-bucket approach. 
FASB board members agreed that the CECL Model would apply in all cases where expected credit losses are based on an expected shortfall in the cash flows that are specified in a contract, and where the expected credit loss is discounted using the interest rate in effect after the modification. This would include troubled debt restructurings. The board has provided additional guidance.
The Technical Plan explains the CECL Model as follows:
"At each reporting date, an entity reflects a credit impairment allowance for its current estimate of the expected credit losses on financial assets held. The estimate of expected credit losses is neither a 'worst case' scenario nor a 'best case' scenario, but rather reflects management's current estimate of the contractual cash flows that the entity does not expect to collect. . . . 
"Under the CECL Model, the credit deterioration (or improvement) reflected in the income statement will include changes in the estimate of expected credit losses resulting from, but not limited to, changes in the credit risk of assets held by the entity, changes in historical loss experience for assets like those held at the reporting date, changes in conditions since the previous reporting date, and changes in reasonable and supportable forecasts about the future. As a result, the balance sheet reflects the current estimate of expected credit losses at the reporting date and the income statement reflects the effects of credit deterioration (or improvement) that has taken place during the period."
The FASB has tentatively decided to require disclosure of the inputs and specific assumptions an entity factors into its calculations of expected credit loss and a description of the reasonable and supportable forecasts about the future that affected their estimate. The entity may be asked to disclose how the information is developed and utilized in measuring expected credit losses.
In July, when the FASB decided to pursue a separate course from the IASB and develop a simpler Model, the FASB explained the three-bucket approach as follows: 
"Previously, the Boards had agreed on a so-called 'expected loss' approach that would track the deterioration of the credit risk of loans and other financial assets in three 'buckets' of severity. Under this Model, organizations would assign to 'Bucket 1' financial assets that have not yet demonstrated deterioration in credit quality. 'Bucket 2' and 'Bucket 3' would be assigned financial assets that have demonstrated significant deterioration since their acquisition."
FASB states in its Technical Plan that the key difference between the CECL Model and the previous three-bucket model is that "under the CECL Model, the basic estimation objective is consistent from period to period, so there is no need to describe a 'transfer notion' that determines the measurement objective in each period."

Bob Jensen's threads on where fair value accounting fails ---

Bob Jensen's threads on Cookie Jar Accounting ---

"The looming shortfall in public pension costs," by Robert Novy-Marx and Josh Rauh, The Washington Post, October 10, 2012 --- Click Here

How much will the underfunded pension benefits of government employees cost taxpayers? The answer is usually given in trillions of dollars, and the implications of such figures are difficult for most people to comprehend. These calculations also generally reflect only legacy liabilities — what would be owed if pensions were frozen today. Yet with each passing day, the problem grows as states fail to set aside sufficient funds to cover the benefits public employees are earning.

In a recent paper, we bring the problem closer to home. We studied how much additional money would have to be devoted annually to state and local pension systems to achieve full funding in 30 years, a standard period over which governments target fully funded pensions. Or, to put a finer point on it, we researched: How much will your taxes have to increase?

Robert Novy-Marx is an assistant professor of finance at the University of Rochester’s Simon Graduate School of Business. Joshua Rauh is a professor of finance at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution.

"The Revenue Demands of Public Employee Pension Promises," by Robert Novy-Marx and Joshua D. Rauh, SSRN, September 16, 2012 ---

We calculate increases in contributions required to achieve full funding of state and local pension systems in the U.S. over 30 years. Without policy changes, contributions would have to increase by 2.5 times, reaching 14.1% of the total own-revenue generated by state and local governments. This represents a tax increase of $1,385 per household per year, around half of which goes to pay down legacy liabilities while half funds the cost of new promises. We examine sensitivity to asset return assumptions, wage correlations, the treatment of workers not currently in Social Security, and endogenous geographical shifts

Bob Jensen's threads on underfunded pensions and bad accounting rules ---

Bob Jensen's threads on the sad state of governmental accounting ---

Squeezy the Pension Python to the rescue in Illinois?
"Illinois the 'Unfixable' Squeezy the Pension Python to the rescue. Or not," The Wall Street Journal, November 22, 2012 ---

Illinois's pension system is heading for a meltdown and may now be beyond help. That's the forecast from a Chicago business group, which told its members last week that the state's pension crisis "has grown so severe" that it is now "unfixable."

The Commercial Club of Chicago wrote that because the November elections did not bring in lawmakers willing to push real reform, the state's roughly $200 billion debt now threatens education, health care and basic public services. The problem is worsening so fast that the usual menu of reforms won't be enough to keep public pensions from sucking taxpayers and whole cities into its yawning maw.

If you think Illinois lawmakers aren't taking the problems seriously enough, just ask Pat Quinn. On Sunday, the Illinois Governor kicked off a "grass-roots" effort to rally the state around pension reform. The Governor hasn't come up with a plan, but don't despair: He introduced the state's new animated mascot, "Squeezy, the Pension Python," and encouraged voters to talk about the problem over Thanksgiving.

Here's some food for thought. The state estimates its unfunded pension liabilities at around $95 billion. But that rosy scenario is based on the assumption that pension investments earn some 8% a year. In fiscal 2012, the Teachers Retirement System had a 0.76% return, the State Employees Retirement System 0.05%, and the General Assembly Retirement System a negative 0.14%.

In July, Moody's MCO +0.09% proposed revising how pension funds calculate their discount rates, with the target for fiscal 2012 at a more realistic 4.1%. Under those assumptions, the gap is even wider than Illinois acknowledges. Meanwhile, the state's annual pension liabilities for 2013 are $5.9 billion, up from $1.6 billion a decade ago.

This isn't news to Illinois politicians, who continue to ignore the coming financial calamity even as the state's bond rating has fallen to the worst in the nation. State lawmakers may hope they can delay the train wreck with modest reforms and the kind of tax hikes Governor Jerry Brown recently foisted on California. Mr. Quinn has said getting a progressive income tax in the state is "one of my goals before I stop breathing."

As if he hasn't done enough harm already, but Mr. Quinn's first goal should be waking up Democratic lawmakers to confront their union buddies. "While a number of pension reforms have been proposed in the General Assembly, these are half-measures at best," the Civic Club continues. "Whether they involve token reductions in cost-of-living adjustments, locking in billions of dollars of unfunded retiree health care obligations or other scenarios, these 'reforms' are either insufficient or stand to make our state's fiscal situation even worse."

Although it is "no longer possible to preserve all state pension benefits as currently structured," the Civic Club adds, there are options that would help. The state should immediately end automatic cost-of-living increases, put a cap on how high a salary can be used to calculate a pension and raise the retirement age to 67.

The Civic Club tiptoes around it, but any real plan for the future will also have to include structural changes, including replacing the defined-benefit plans with the kind of defined-contribution plans that are typical in the private economy. More likely is that the politicians keep abdicating and then hit up President Obama for a federal bailout.

Jensen Comment
Sadly Illinois cannot erase its pension obligations by inflationary printing ("Quantitative Easing") of its own currency  like the United States and Zimbabwe are now doing to meet financial obligations --- unless Illinois withdraws from the dollar zone which is unlikely in the near future. Perhaps Illinois will make future pension promises in Squeezy Pension Python Illinois currency spendable only within Illinois.

President Obama's political career was launched in Illinois. Before he leaves office in 2016 he will probably make the ouchie better --- at least for Illinois.


"The looming shortfall in public pension costs," by Robert Novy-Marx and Josh Rauh, The Washington Post, October 10, 2012 --- Click Here

How much will the underfunded pension benefits of government employees cost taxpayers? The answer is usually given in trillions of dollars, and the implications of such figures are difficult for most people to comprehend. These calculations also generally reflect only legacy liabilities — what would be owed if pensions were frozen today. Yet with each passing day, the problem grows as states fail to set aside sufficient funds to cover the benefits public employees are earning.

In a recent paper, we bring the problem closer to home. We studied how much additional money would have to be devoted annually to state and local pension systems to achieve full funding in 30 years, a standard period over which governments target fully funded pensions. Or, to put a finer point on it, we researched: How much will your taxes have to increase?

Robert Novy-Marx is an assistant professor of finance at the University of Rochester’s Simon Graduate School of Business. Joshua Rauh is a professor of finance at the Stanford Graduate School of Business and a senior fellow at the Hoover Institution.

What do the following states sadly share in common?

You know it must be really bad if California did not make the list.

"Nine States with Sinking Pensions," 247 Wall Street, October 18, 2012 --- Click Here

Several years after from the financial crisis of 2008, state pension funds continue to languish. According to data released this week by Milliman, Inc. and by the Pew Center on the States, there was a $859 billion gap between the obligations of the country’s 100 largest public pension plans and the funding of these pensions. Most of these are state funds, and state legislatures have attempted to respond to this growing crisis by making numerous reforms to try to combat this growing deficit.

In 2010, only Wisconsin’s pension funds were fully funded. Nine states, meanwhile, were 60% funded or less — this would mean that at least 40% of the amount the state owes current and future retirees is not in the state’s coffers. In Illinois, just 45% of the state’s pension liabilities were funded. In some of these states, the gap between the outstanding liability and the amount funded was in the tens of billions of dollars. California alone had $113 billion in unfunded liability. Based on Pew’s report, “The Widening Gap Update,” 24/7 Wall St. identified the nine states with sinking pensions.

Each year, actuaries determine how much a state should contribute to its pensions to keep them funded. Many states, for various reasons, did not pay the full recommended contributions for 2010, while others have been paying the recommended amount for years. In an interview with 24/7 Wall St., Milliman Inc. principal and consulting actuary Becky Sielman explained that despite states making the recommended payments, many large individual public retirement funds are still underfunded.

Of the nine states with pensions that are underfunded by 40% or more, three paid more than 90% of the recommended contributions, and two, Rhode Island and New Hampshire, paid the full amount. Despite this, pension contributions were still generally higher in states that were better funded. Of the 16 states that were at least 80% funded — a level experts consider to be fiscally responsible — 11 contributed at least 97% of the recommended amount.

In an interview with 24/7 Wall St., Pew Center on the States senior researcher David Draine explained why, despite paying the full amount, several states continued to be severely underfunded. He pointed out that meeting contributions was important. He added that states that made full contributions in 2010 were 84% funded on average, compared to those that did not, which were only 72% funded.

To explain why several states that are making full contributions are still underfunded, Draine said much of it has to do with investment losses. “The 2000s have been a terrible period for pension investments that have fallen short of their expectations … that’s a big part of the growth in the funding gap.”

Unfunded liability can also grow due to overly optimistic assumptions about investment growth, pension payments that become deferred, and an increase in benefits or an increase in the number of beneficiaries without a corresponding increase in contributions, Draine explained.

Based on the Pew Center for the States report, “The Widening Gap Update,” 24/7 Wall St. identified the nine states with public pensions that were 60% or less funded as of 2010. From the report, we considered the total outstanding liability, the total amount funded, and the proportion of the recommended contribution each state made in 2010. We also reviewed the level of funding for the 100 largest pension funds in each state, provided by Milliman’s Public Pension Fund Study, which covered a period from June 30, 2009, to January 1, 2011.

Continued in article

Bob Jensen's threads on the sad state of governmental accountancy and accountability ---

Bob Jensen's threads on the sad state of pension accounting ---

Quantitative Easing = Printing Money for the Money Supply --- http://en.wikipedia.org/wiki/Quantitative_easing

"Is Ben Bernanke Unleashing Inflation?" by Peter Coy, Bloomberg Business Week, November 21, 2012 ---

. . .

“This is a trap,” Goodfriend warned. If the Fed waits to tighten monetary policy until inflation becomes a concern, it will be too late, he said: High inflation will become embedded in the economy and it will take years of punitively high rates to stamp it out.

Continued in article


Many of us agree with Keynesians Paul Krugman and Alan Blinder that there are some benefits to massive government spending at the start of a severe economic crash. But the trouble with most Keynesians these days is that they don't know when to stop. There's now a perpetual excuse that the economy is just too fragile to stop printing money to pay government's bills. Confiscating the wealth of the 1% won't make a dent in the weak economy. And hence the money presses just keep rolling and rolling until one morning you wake up and guess what? You're in Zimbabwe that is now printing million dollar bills, two of which it takes to by one chicken egg.

In the media, Peter Schiff is the best-known financial analyst who publically predicted the economic collapse of 2008 long before it happened, including his predictions of the bursting of the real estate bubble. He did not, however, make as many millions on his predictions as several others who quietly gambled on the crash. Some of those heavily leveraged winnings, however, might've been due more to luck than the deep analysis of Peter Schiff ---

I might note that "Quantitative Easing" QE1-QE3 in the U.S. is short hand for when the Fed cranks up printing presses for money so the U.S. Government can pay its bills without having to either tax or borrow. Sounds like a good idea since these have been trillions of dollars that do not add to the trillion-dollar deficit or National Debt or rile taxpayers ---

I might also note that I personally think the government is now lying about inflation since with a wave of the magic wand it took fuel, food, and other consumer items out of the calculation of inflation. The current calculation of inflation is also distorted by the crash in the housing market that does not reflect the rising costs of materials going into new and rebuilt homes. For your students, when you want to illustrate how to lie with statistics show them how inflation is calculated by the government.

"When Infinite Inflation Isn't Enough," by Peter Schiff, Townhall, November 9, 2012 ---

If no one seems to care that the Titanic is filling with water, why not drill another hole in it? That seems to be the M.O. of the Bernanke Federal Reserve. After the announcement of QE3 (also dubbed "QE Infinity") created yet another round of media chatter about a recovery, the Fed's Open Market Committee has decided to push infinity a little bit further. The latest move involves the rolling over of long-term Treasuries purchased as part of Operation Twist, thereby more than doubling QE3 to a monthly influx of $85 billion in phony money starting in December. I call it "QE3 Plus" - now with more inflation!

Inflation By Any Other Name

In case you've lost track of all the different ways the Fed has connived to distort the economy, here's a refresher on Operation Twist: the Fed sells Treasury notes with maturity dates of three years or less, and uses the cash to buy long-term Treasury bonds. This "twisting" of its portfolio is supposed to bring down long-term interest rates to make the US economy appear stronger and inflation appear lower than is actually the case.

The Fed claims operation twist is inflation-neutral as the size of its balance sheet remains constant. However, the process continues to send false signals to market participants, who can now borrow more cheaply to fund long-term projects for which there is no legitimate support. I said it last year when Operation Twist was announced, and I'll continue to say it: low interests rates are part of the problem, not the solution.

Interventions Are Never Neutral

Just as the Fed used its interest-rate-fixing power to make dot-coms and then housing appear to be viable long-term investments, they are now using QE3 Plus to conceal the fiscal cliff facing the US government in the near future.

As the Fed extends the average maturity of its portfolio, it is locking in the inflation created in the wake of the '08 credit crisis. Back then, we were promised that the Fed would unwind this new cash infusion when the time was right. Longer maturities lower the quality and liquidity of the Fed's balance sheet, making the promised "soft landing" that much harder to achieve.

The Fed cannot keep printing indefinitely without consumer prices going wild. In many ways, this has already begun. Take a look at the gas pump or the cost of a hamburger. If the Fed ever hopes to control these prices, the day will inevitably come when the Fed needs to sell its portfolio of long-term bonds. While short-term paper can be easily sold or even allowed to mature even in tough economic conditions, long-term bonds will have to be sold at a steep discount, which will have devastating effects across the yield curve.
It won't be an even trade of slightly lower interest rates now for slightly higher rates in the future. Meanwhile, in the intervening time, the government and private sectors will have made a bunch of additional wasteful spending. When are Bernanke & Co. going to decide is the right time to prove that the United States is fundamentally insolvent? Clearly this plan lays down an even stronger incentive to continue suppressing interest rates until a mega-crisis forces their hands. 

Also, when interest rates rise - the increase made even sharper by the Fed's selling - the Fed will incur huge losses on its portfolio, which, thanks to a new federal law, will become a direct obligation of the US Treasury, i.e. you, the taxpayer! 

Of course, the Fed refuses to accept this reality. Even though a painful correction is necessary, nobody in power wants it to happen while they're in the driver's seat. So Bernanke will stick with his well-rehearsed lines: the money will flow until there is "substantial improvement" in unemployment.

Does Bernanke Even Believe It?

Even Bernanke must have a hunch that there isn't going to be any "substantial improvement" in the near term. I suggested before QE3 was announced that a new round of stimulus might be Bernanke's way of securing his job, but recent speculation is that he may step down when his current term as Fed Chairman expires. Perhaps he is cleverer than I thought. He'll be leaving a brick on the accelerator of an economy careening towards a fiscal cliff, and bailing before it goes over the edge. Whoever takes his place will have to pick up the pieces and accept the blame for the crisis that Bernanke and his predecessor inflamed.

Don't Gamble Your Savings on Politics

For investors looking to find a safe haven for their money, QE3 Plus is a strong signal that the price of gold and silver are a long way from their peaks. Gold hit an eleven-month high at the beginning of October after the announcement of QE3, but the response to the Fed's latest meeting was lackluster. When the Fed officially announces its commitment to QE3 Plus in December, I wouldn't be surprised to see a much bigger rally. For that matter, many are keeping an eye on the election outcome before making a move on precious metals.

Continued in article

Jensen Comment
Many of us agree with Keynesians Paul Krugman and Alan Blinder that there are some benefits to massive government spending at the start of a severe economic crash. But the trouble with most Keynesians these days is that they don't know when to stop. There's now a perpetual excuse that the economy is just too fragile to stop printing money to pay government's bills. Confiscating the wealth of the 1% won't make a dent in the weak economy. And hence the money presses just keep rolling and rolling until one morning you wake up and guess what? You're in Zimbabwe that is now printing million dollar bills, two of which it takes to by one chicken egg.


From the CFO Journal on November 19, 2012

Ex-bosses reap big consulting fees. Former executives often land lucrative consulting gigs at their old companies, writes the Journal’s Joann S. Lublin. Boards dole them out to smooth transitions and stop ex-bosses from joining rivals or poaching staff. But Brandon Rees, head of the AFL-CIO’s Office of Investment, says consulting agreements often are a hidden substitute for severance pay.” And they don’t always work out for executives. A CBS finance chief, Fredric G. Reynolds, assisted his longtime employer for a while after he left, but there wasn’t that much to do and he “couldn’t justify” continuing, so he asked CBS to halt payments. Reynolds says boards should be more skeptical of consulting agreements. “It’s a way to get people to move on … But it doesn’t wind up being very productive.”

"Lucrative Consulting Fees Reach Bigger Set," by Hoann S. Lublin, The Wall Street Journal, November 19, 2012 ---

When Samuel J. Palmisano retires next month, he'll enjoy a generous goodbye present: The former International Business Machines Corp. IBM +1.82% chief will earn $20,000 for any day he spends four hours advising his longtime employer.

That means hypothetically he could pocket $400,000 a year for 20 half-days of work—twice what his predecessor, Louis V. Gerstner Jr., makes per day under a similar consulting arrangement. Mr. Palmisano's contract is open-ended and doesn't specify the number of days he will work. Mr. Gerstner's 10-year consulting contract expires in March.

Many former executives enjoy lucrative consulting gigs at their old companies. Boards dole out these agreements to guarantee smooth leadership transitions and prevent former bosses from joining a rival, poaching staffers or filing suit against the company.

Companies have paid key former executives as consultants since at least the 1970s, and the practice gained acceptance because boards wanted continued access to those ex-officials' knowledge, according to several executive-pay attorneys.

In some cases, the deals are so generous that they go beyond the grave—such as the consulting accord for Phillip "Rick" Powell, who stepped down as CEO of First Cash Financial Services Inc. FCFS +5.17% in 2005.

Under Mr. Powell's consulting contract, the operator of pawn shops and check-cashing stores was required to pay $3.5 million in consulting fees if Mr. Powell had died during 2011, the company's latest proxy said. (The 62-year-old Mr. Powell, who has been fighting U.S. charges of illegal insider trading since last year, remains alive and well.)

The controversial perquisite bothers some activist investors, especially because these deals are sometimes made when a company is nudging an executive out the door.

"Consulting agreements often are a hidden substitute for severance pay," says Brandon Rees, head of the AFL-CIO's Office of Investment. "Their questionable value will influence how shareholders vote on executive pay in the 2013 proxy season."

Consulting arrangements have fallen in popularity among CEOs over the past decade, but are gaining traction for other departing C-suite leaders, according to analyses for The Wall Street Journal.

In the five years ended Aug. 1, 16 former leaders of the nation's 1,000 biggest concerns took home at least $500,000 in consulting fees, concludes Equilar Inc., a pay-research firm. That compares with 28 retired chiefs making that much between 1996 and 2001, a previous WSJ study found.

Yet "there's a general upward trend" since 2007 in the number of consulting contracts for other senior executives, such as finance chiefs or general counsel, reports Theo Francis, an independent compensation researcher. He reviewed nearly 300 such agreements for the Journal.

Just a tiny fraction require a minimum workload—7 of 174 recently disclosed executive consulting agreements, according to a separate study by Mr. Francis. (Mr. Francis is a former Journal reporter who left the paper in 2008.)

Kimberly-Clark Corp. KMB +1.14% guarantees Jan B.C. Spencer $50,000 per quarter through mid-2014 for consulting services—and a maximum of 200 hours a year, according to a regulatory filing. The senior vice president retired in June at age 57 after more than three decades with the company, and says he chose to limit his hours because he didn't want an "onerous" obligation.

He estimates he spent nearly 50 hours counseling former colleagues this summer, such as helping a European team with planning.

Smooth transitions are a big part of the plan. Advice from a predecessor proved useful during James D. Wehr's initial months as chief executive of insurer Phoenix Cos. PNX +3.92% Dona D. Young, his predecessor, received $300,000 for six months of consulting after she retired in 2009.

"Dona helped me transition into my new role and expand my relationships inside and outside the company,'' Mr. Wehr recalled. Thomas Johnson, Phoenix's board chairman, said Mrs. Young was especially useful in the initial months, and coached Mr. Wehr about promoting a rising star whom she had been grooming while CEO. Mrs. Young declined to comment.

It doesn't always work out, though. In early 2008, Acxiom Corp. ACXM +1.27% promised to pay departing Chief Executive Charles Morgan $500,000 annually for up to three years of consulting. Mr. Morgan agreed to help his successor, John Meyer, strengthen the company's customer ties and advise on technology strategy, according to his consulting accord. But less than two months later, management stopped using Mr. Morgan's services. An Acxiom spokeswoman declines to say why. Per his accord, Mr. Morgan still collected $1.5 million. He didn't return calls seeking comment.

At Boeing Co., BA +1.65% Scott Carson retired in January 2010 after running its commercial airplanes unit. He earned about $1.5 million for advising Boeing no more than 75 hours a month. The two-year contract expired last March.

Mr. Carson's replacement, Jim Albaugh, "had relatively limited experience with our commercial customers," and so the former executive "provided continuity," a company spokesman says.

Mr. Carson says he attended aircraft-delivery events and accompanied colleagues to complete sales, including one in Ethiopia. But he never consulted the maximum amount per month, the retired executive says. And "in the last six months, it was nothing"—even though he received his full fee.

The transition "ended up being a bit shorter than we estimated," the Boeing spokesman explains.

Mr. Carson now chairs the board of regents for Washington State University, among other things.

A CBS Corp. CBS +2.65% finance chief who won a post-retirement consulting gig took an unusual approach after he no longer felt needed. Fredric G. Reynolds was due $100,000 a month for three months after leaving the media concern in August 2009, followed by $60,000 a month through August 2010.

Mr. Reynolds says he assisted his longtime employer with U.K. outdoor billboard deals, among other things. By early 2010, however, he stopped being busy for CBS, he recalls. "I couldn't justify doing this [consulting] through August," he says.

CBS accepted Mr. Reynolds's request, halting payments in late February, a spokesman says.

Former executives rarely cut short their consulting gigs, however.

Mr. Reynolds says boards should be more skeptical of such arrangements. "It's a way to get people to move on," he notes. "But it doesn't wind up being very productive."

Continued in article

Bonuses for What?
The only guy to make almost a $100 Million dollars at GE is the CEO who destroyed shareholder value by nearly 50% in slightly less than a decade

"GE has been an investor disaster under Jeff Immelt," MarketWatch, March 8, 2010 ---

When things go well, chief executives of major companies rack up hundreds of millions of dollars, even billions, on their stock allotments and options.

It's always justified on the grounds that they've created lots of shareholder value. But what happens when things go badly?

For one example, take a look at General Electric Co. /quotes/comstock/13*!ge/quotes/nls/ge (GE 16.27, +0.04, +0.22%) , one of America's biggest and most important companies. It just revealed its latest annual glimpse inside the executive swag bag.

By any measure of shareholder value, GE has been a disaster under Jeffrey Immelt. Investors haven't made a nickel since he took the helm as chairman and chief executive nine years ago. In fact, they've lost tens of billions of dollars.

The stock, which was $40 and change when Immelt took over, has collapsed to around $16. Even if you include dividends, investors are still down about 40%. In real post-inflation terms, stockholders have lost about half their money.

So it may come as a shock to discover that during that same period, the 54-year old chief executive has racked up around $90 million in salary, cash and pension benefits.

GE is quick to point out that Immelt skipped his $5.8 million cash bonus in 2009 for the second year in a row, because business did so badly. And so he did.

Yet this apparent sacrifice has to viewed in context. Immelt still took home a "base salary" of $3.3 million and a total compensation of $9.9 million.

His compensation in the previous two years was $14.3 million and $9.3 million. That included everything from salary to stock awards, pension benefits and other perks.

Too often, the media just look at each year's pay in isolation. I decided to go back and take the longer view.

Since succeeding Jack Welch in 2001, Immelt has been paid a total of $28.2 million in salary and another $28.6 million in cash bonuses, for total payments of $56.8 million. That's over nine years, and in addition to all his stock- and option-grant entitlements.

It doesn't end there. Along with all his cash payments, Immelt also has accumulated a remarkable pension fund worth $32 million. That would be enough to provide, say, a 60-year-old retiree with a lifetime income of $192,000 a month.

Yes, Jeff Immelt has been at the company for 27 years, and some of this pension was accumulated in his early years rising up the ladder. But this isn't just his regular company pension. Nearly all of this is in the high-hat plan that's only available to senior GE executives.

Immelt's personal use of company jets -- I repeat, his personal use for vacations, weekend getaways and so on -- cost GE stockholders another $201,335 last year. (It's something shareholders can think about when they stand in line to take off their shoes at JFK -- if they're not lining up at the Port Authority for a bus.)



Bob Jensen's threads on outrageous compensation ---

"Why a Low Carbon Price Can Be Good News for the Climate," by Eric Pooley, Harvard Business Review Blog, November 21, 2012 --- Click Here

Coal is Still King




Healthcare Video and Cases From PwC
Why mobile technology may well define the future of healthcare... for everyone. ---

PwC mHealth (read that Mobile Health) Master Site --- http://www.pwc.com/gx/en/healthcare/mhealth/index.jhtml?WT.ac=vt-mhealth#&panel1-1

Mobile is accelerating trends in healthcare

Three major trends already happening in healthcare lend themselves to the revolution in mobile technology:

Ageing population

Ageing populations and chronic illness are driving regulatory reform. Public sector healthcare is seeking better access and quality, and it's looking to the private sector for innovation and efficiency. mHealth improves access and quality, and offers dramatic innovation and cost reduction.

Foundations already in place

The foundations of industrialisation of healthcare are already in place — electronic medical records, remote monitoring and communications. ‘Care anywhere’ is already emerging. The platform for mHealth is set.


Healthcare, like other industries, is getting personal. mHealth can offer personal toolkits for predictive, participatory and preventative care.

"An Overview of the Affordable Care Act," by Matt Kukla, Scribed, November 2012 ---

As you know, health care has been a highly politicized topic in recent years and become a focal point of theupcoming elections. Solving our health care crisis is crucial to the survival, productivity and well being of boththe U.S. economy and all its citizens. Fortunately, there exists a growing body of evidence from across theworld offering solutions for fixing our health system – evidence that bridges and blends the best of bothpolitical parties for those open minded enough to see it. Yet it is stuck behind the curtain of drama andpartisanship, and I fear the ongoing political theatre will prevent us from utilizing this body of knowledge.I recently finished my PhD in Health Systems Financing, Economics and Policy and returned from working atthe World Health Organization in Geneva. While my background focuses on the U.S. health care system, mostof my work involves reforming health systems in other developed and developing countries. I essentially dealwith (a) how institutional frameworks, governance, and political systems impact health care and (b) howhealth care dollars are collected, pooled, and redistributed / paid among the big three (insurance, individualsand medical providers). Because this is the primary goal of the Affordable Care Act (Obamacare) and given thetremendous amount of misinformation circulating about these issues, I have writtena summary of (a) whatour existing health care system looks like, notably the root causes of rising costs and the uninsured, (b) thetrue content of the Affordable Care Act, (c) what the ACA should have done differently, and (d) someadditional insights into our health care system that you might find prevalent and interesting.I realize that terms like “Evidence” and “Facts” are thrown around so frequently in American society,individuals rarely know which are truly accurate and non-biased. Political parties, special interest groups, andmany Americans are also willing to utilize sound research when it supports their arguments but are keen todebunk it as biased when it does not. As such, I want to ensure your confidence that this write-up is accurateand non-biased. My data comes from my own work and a range of sources including the World Bank, WorldHealth Organization, top academic literature, and the best non-partisan policy think tanks (RAND,Commonwealth Fund, Health Affairs, Kaiser). I have also been critical of many liberal and conservative "talkingpoints" as well as the ACA, while providing the most updated evidence where possible. If you have any questions about these sources or wish to read them, please don’t hesitate to email me.

The Problem Interestingly, the U.S. health care system is not actually a system, but something that has been put togetherpiecemeal over decades of policymaking. Our political system is built for incremental policymaking at best;thus health care reforms have built on one another only to fill in any existing gaps. Yet we have never steppedback, looked at the big picture and restructured the entire system to be coordinated, efficient or effective. It'slike continuing to put band-aids on a gushing wound, when what's needed is surgery. Or it's like having 40workers operate an assembly line that's meant for 15 people -- instead of removing them and simplifying, weadd more people to manage those 40. The system becomes increasingly layered, inefficient, ineffective,complex and stagnant. The following is a brief overview of what our existing health care system looks like as aresult of this reform process. While there is no silver bullet or single change that will fix our health care system(despite what people tell you), overwhelming evidence from dozens of developed countries and the USsuggests that the following factors account for a significant portion of the growth in our healthcare costs (18percent of GDP vs. 8-13 percent in most other developed countries) and lack of health care coverage (19percent of the population / 49 million vs. 1-2 percent in other countries

Continued in article

Healthcare Video and Cases From PwC
Why mobile technology may well define the future of healthcare... for everyone. ---

PwC mHealth (read that Mobile Health) Master Site --- http://www.pwc.com/gx/en/healthcare/mhealth/index.jhtml?WT.ac=vt-mhealth#&panel1-1

Mobile is accelerating trends in healthcare

Three major trends already happening in healthcare lend themselves to the revolution in mobile technology:

Ageing population

Ageing populations and chronic illness are driving regulatory reform. Public sector healthcare is seeking better access and quality, and it's looking to the private sector for innovation and efficiency. mHealth improves access and quality, and offers dramatic innovation and cost reduction.

Foundations already in place

The foundations of industrialisation of healthcare are already in place — electronic medical records, remote monitoring and communications. ‘Care anywhere’ is already emerging. The platform for mHealth is set.


Healthcare, like other industries, is getting personal. mHealth can offer personal toolkits for predictive, participatory and preventative care.

The booked National Debt in August 2012 went over $16 trillion --- 
U.S. National Debt Clock --- http://www.usdebtclock.org/
Also see http://www.brillig.com/debt_clock/

How does the U.S. government hide its true debt total?

Firstly, there are $100-$200 trillion in unbooked entitlements. Nobody has an accurate estimate of those future obligations, especially for the Medicare gorilla.

The U.S. currently has "booked" National Debt slightly over $16 trillion that is a more accurate estimate of the debt coming due soon?
Or is this an accurate number by any stretch of the imagination?

"Why $16 Trillion Only Hints at the True U.S. Debt:  Hiding the government's liabilities from the public makes it seem that we can tax our way out of mounting deficits. We can't," by Chris Cox (former SEC Director) and Bill Archer (PwC), The Wall Street Journal, November 26, 2012 ---

A decade and a half ago, both of us served on President Clinton's Bipartisan Commission on Entitlement and Tax Reform, the forerunner to President Obama's recent National Commission on Fiscal Responsibility and Reform. In 1994 we predicted that, unless something was done to control runaway entitlement spending, Medicare and Social Security would eventually go bankrupt or confront severe benefit cuts.

Eighteen years later, nothing has been done. Why? The usual reason is that entitlement reform is the third rail of American politics. That explanation presupposes voter demand for entitlements at any cost, even if it means bankrupting the nation.

A better explanation is that the full extent of the problem has remained hidden from policy makers and the public because of less than transparent government financial statements. How else could responsible officials claim that Medicare and Social Security have the resources they need to fulfill their commitments for years to come?

As Washington wrestles with the roughly $600 billion "fiscal cliff" and the 2013 budget, the far greater fiscal challenge of the U.S. government's unfunded pension and health-care liabilities remains offstage. The truly important figures would appear on the federal balance sheet—if the government prepared an accurate one.

But it hasn't. For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The U.S. Treasury "balance sheet" does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. But it does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations.

As a result, fiscal policy discussions generally focus on current-year budget deficits, the accumulated national debt, and the relationships between these two items and gross domestic product. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government's true liabilities.

The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.

Why haven't Americans heard about the titanic $86.8 trillion liability from these programs? One reason: The actual figures do not appear in black and white on any balance sheet. But it is possible to discover them. Included in the annual Medicare Trustees' report are separate actuarial estimates of the unfunded liability for Medicare Part A (the hospital portion), Part B (medical insurance) and Part D (prescription drug coverage).

As of the most recent Trustees' report in April, the net present value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion.

Were American policy makers to have the benefit of transparent financial statements prepared the way public companies must report their pension liabilities, they would see clearly the magnitude of the future borrowing that these liabilities imply. Borrowing on this scale could eclipse the capacity of global capital markets—and bankrupt not only the programs themselves but the entire federal government.

These real-world impacts will be felt when currently unfunded liabilities need to be paid. In theory, the Medicare and Social Security trust funds have at least some money to pay a portion of the bills that are coming due. In actuality, the cupboard is bare: 100% of the payroll taxes for these programs were spent in the same year they were collected.

In exchange for the payroll taxes that aren't paid out in benefits to current retirees in any given year, the trust funds got nonmarketable Treasury debt. Now, as the baby boomers' promised benefits swamp the payroll-tax collections from today's workers, the government has to swap the trust funds' nonmarketable securities for marketable Treasury debt. The Treasury will then have to sell not only this debt, but far more, in order to pay the benefits as they come due.

When combined with funding the general cash deficits, these multitrillion-dollar Treasury operations will dominate the capital markets in the years ahead, particularly given China's de-emphasis of new investment in U.S. Treasurys in favor of increasing foreign direct investment, and Japan's and Europe's own sovereign-debt challenges.

When the accrued expenses of the government's entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually. That is the total of the average annual accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.

Nothing like that $8 trillion amount is available for the IRS to target. According to the most recent tax data, all individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion. That comes to $6.7 trillion available to tax from these individuals and corporations under existing tax laws.


In short, if the government confiscated the entire adjusted gross income of these American taxpayers, plus all of the corporate taxable income in the year before the recession, it wouldn't be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities. Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon. Only by addressing these unsustainable spending commitments can the nation's debt and deficit problems be solved.

Neither the public nor policy makers will be able to fully understand and deal with these issues unless the government publishes financial statements that present the government's largest financial liabilities in accordance with well-established norms in the private sector. When the new Congress convenes in January, making the numbers clear—and establishing policies that finally address them before it is too late—should be a top order of business.

Mr. Cox, a former chairman of the House Republican Policy Committee and the Securities and Exchange Commission, is president of Bingham Consulting LLC. Mr. Archer, a former chairman of the House Ways & Means Committee, is a senior policy adviser at PricewaterhouseCoopers LLP.

Jensen Comment
Let's forget about this debt and entitlement nonsense.
President Obama should appoint Nobel Laureate Professor Paul Krugman as his only economic advisor and print all the money we owe without having to worry about taxes and spending and cliffs. It's called Quantitative Easing but by any other name it's just printing greenbacks to scatter over the money supply ---

Not because we will need the money, but let's also confiscate the wealth of the top 25% as punishment for their abuses of the tax and regulation laws. Greed is a bad thing, and they need to be knocked to ground level because of their greed.


Bob Jensen's threads on the sad state of governmental accounting (it's all done with smoke and mirrors) ---

Bob Jensen's threads on entitlements ---

Whether or not you love or hate the scholarship and media presentations of the University of Chicago's Milton Friedman, I think you have to appreciate his articulate response on this historic Phil Donohue Show episode. Many of the current dire warnings about entitlements were predicted by him as one of the cornerstones in his 1970's PBS Series on "Free to Choose." We just didn't listen as we poured on unbooked national debt (over $100  trillion and not counting) for future generations to deal with rather than pay as we went so to speak! .
The Grand Old Scholar/Researcher on the subject of greed in economics
Video:  Milton Friedman answers Phil Donohue's questions about capitalism.---

Bob Jensen's health care messaging updates --- http://www.trinity.edu/rjensen/Health.htm

Adding Pain to Misery in Medicare Funding of the Future
"The Dementia Plague:  As the world's population of older people rapidly grows in the coming years, Alzheimer's and other forms of dementia will become a health-care disaster," by Stephen S. Hall, MIT's Technology Review, October 5, 2012 --- Click Here


Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm


Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/