05.25.06

Guilty

Posted in Money & Finance at 3:59 pm by Administrator

Monopoly Go To Jail Chance Card

Former Enron bigwigs Kenneth Lay and Jeffrey Skilling have just been found guilty of, among other things, terminal stupidity in not fleeing to Argentina when they had the chance. Now, they will probably spend the rest of their lives in Federal PMITA Prison. I don’t feel sorry for them.

Seriously though, did they actually think they would be able to beat this? They won’t be able to pull a Martha Stewart and come out even stronger. Thousands of people lost their pensions and life savings. (Diversify. Diversify.)

The long term ramifications should be interesting. Since Enron’s collapse, new laws have been passed that increase accounting transparency in publicly held companies. This trial definitely sends the message that high level executives will be held accountable for book-keeping fraud. I suppose it’s a responsibility that goes with those huge salaries.

Ultimately, I suspect, these changes will make the end result of this mess a positive. The more investors know about a company’s books, the better decisions they can make. In a way, the Enron debacle made the market a little more efficient.

05.24.06

Extravagance

Posted in Money & Finance at 5:55 pm by Administrator

A few days ago I got my 2005 Annual Report for Ameristar Casinos Inc. (Nasdaq ASCA), of which I own a small amount of stock. The report is a huge, glossy magazine measuring twenty-two inches by thirteen inches. It came in a triangular cardboard box, and cost $7.20 to ship to me.

The report is handsome to be sure (and it quotes Frank Lloyd Wright). Still, it had the opposite effect on me than was intended. Reports such as this one should encourage investment in the company. But why would I want to invest in a company that spends its capital (my investment) on lavish annual reports? They should be spending it on more slot machines.

I have no problem with expensive advertising campaigns. My problem with this one is that it does not target customers. It targets investors. Investor interest may boost the stock price; but it will not add real value to the company. Although I haven’t decided whether I will keep the stock, this does not encourage me.

Ameristar Casinos Annual Report

Ameristar Casinos Inc. 2005 Annual Report

05.02.06

Speaking of which…

Posted in Politics, Money & Finance, World at 1:06 am by Administrator

Soldiers occupying natural gas plants in bolivia

Apparently as a sort of May Day celebration, Bolivia’s socialist president Evo Morales has decided to nationalize the country’s natural gas production. Declaring, “The looting by the foreign companies has ended,” Morales sent troops to occupy gas fields tapped by multinational companies such as Exxon-Mobil and BP PLC. Unless the foreign companies agree to sign new (extortionary) contracts within six months, they will be evicted. 

This is not altogether surprising. Bolivia is the most recent in a long list of countries to have been “returned to the natives,” and “the natives” always seem to do the same thing.

I suggest that ALL the foreign companies pack up and leave NOW (Burning their infrastructure would probably be too much to ask). It would be a short term loss but a long term gain. It’s likely Morales plans to seize them anyway as soon as the state owned gas company is ready to take over production. Compliance by the corporations would encourage every other Mugabe and Castro to try something similar (not that they don’t already).

It will be interesting to see if the existing companies choose to put up with this sort of extortion. I suspect they’ll go more by the numbers than by any sort of principle. Any bets as to the effect total nationalization would have on Bolivia’s natural gas production?

Note: Bolivia has not yet nationalized production of its most popular export, so the supply will likely be unaffected. Whew. 

04.21.06

Bryan Larsen and BB&T

Posted in Art & Drama, Money & Finance at 1:30 am by Administrator

Bryan Larsen painting for BB&T

Bryan Larsen, one of my favorite Romantic Realist artists, is aparently also admired by the folks at BB&T. Their 2005 Annual Review features his art including the painting above, which he did just for them.

BB&T, along with its objectivist CEO John A. Allison, gained attention earlier this year when they announced they “will not lend to commercial developers that build condominiums, shopping malls, and other private structures on land taken from private citizens by government entities using eminent domain.” 

Clearly a company you can feel good about owning. I’ll have to buy a few shares…just to get their stockholder packets.