Office Rumors

Here are the five most popular posts for July:

• Always Read It… (the fine print). A recent entry from Jessica Hagy’s Indexed blog (link at right). Buy the book!
• Officials Let DNC Avoid Gas Taxes, Pocket Cool Half Million… following much “outrage” in the blogosphere and elsewhere, the city has turned off the spigot.
• Venture Capital Floods to Alternative Energy; ETFs Sprout… I looked at the cliche “where is the next bubble” question and found a possible location: alternative energy.
• Muppets. On the Internet... A funny Muppet clip. Its only 17 seconds long. Thanks redditors!
• Lazy Portfolio Example… One of many that could be thought up. The second post on this list from June.

Thanks for a great month, all. There is plenty more to come.

As noted a number of times previously at this blog (recently and in April), Corn and other plant-based (in this context meaning seed, dirt, sprout, etc.) biofuels are not efficient. The are horrible polices that help politicians get elected, but ruin all sorts of markets.

The blog Triplepundit has a very interesting article on biofuel that could potentially help our fuel issues with the benefits of far less-destructive environmental and world food market effects. Here are some of the Algae details:

It also produces lipids, or the equivalent of vegetable oil. Depending on the species, 50% of it’s body weight is these lipids. And they can select for certain algae strains that are particularly suited for making jet fuel or diesel, which most long haul trucks use.

[...]

Algae, even in a regular, horizontal, open pond system, can produce up to 20,000 gallons of oil per year.

Based on previous parts of the article, this system is assumed to take up one acre of land, as comparisons have been 18/gallons from corn and 700-800 from palm oil. All of the waste can be reused as well:

With algae biofuel production, they can take what remains after extracting the oil, and put it to use as feed stock for animals, as a component of fertilizer, and even to produce even more biofuel.

I believe most people would be in favor of fuel that is cleaner on a lifecycle basis, and has less of a wide-ranging impact. Algae, at this point, looks to do just that, and would be a very valuable addition to our nation’s energy “portfolio.”

This evening I changed the theme/layout/design of the website. Its another cookie cutter, but I think this one fits. Its simpler and doesn’t have problems with the right navigation bar. There is no custom header image, but that’s just fine.

Thoughts?

I’m not normally the one to dream up conspiracies. For example, I’ll call you delusional if you’re one of the folks that believes the Bush Administration set up the attacks on 9/11. On the other hand, people would probably call me crazy for saying “Wag the Dog” and Bill Clinton’s interesting tendency to make military strikes when the heat was on him for, er, domestic issues, are strikingly similar–more so than Oliver Stone’s movie could ever be.

My thoughts:

Used under a Creative Commons License. Crooked Door by Skinnyde (Flickr)

What chance is it that there are politician motivations for the indictment of Sen. Ted Stevens to take the heat off Justice Department employees embroiled in the politically-motivated hiring policies of the Gonzalez Justice Department?

Politics is far reaching, and a connection here–although it wouldn’t really matter or be significant–would not surprise me one bit. I probably am going crazy, though. If some of these stories surrounding Stevens are true, he needs to go:

On Tuesday a federal grand jury charged Stevens with failing to report gifts from Veco, including cars and free labor for a home in Girdwood, Alaska the senator called “the chalet.”

Maybe it will serve as an example for other Politicians and they’ll at least be a little more careful to conceal their dealings. In fact, the article I linked to above speculates on the involvement of other officials:

[Stevens] isn’t the only U.S. lawmaker whose fortunes are likely threatened by his ties to an obscure oil services company [...].

Am I going crazy, or just being a little too cynical? Any thoughts of your own on this?

Also, I’m adding a new category for just this sort of discussion (because it makes me all sorts of angry): “Crooks!”

UPDATE 7/31 @ 8:50a: It appears that I’m not the only one that thinks this. White Collar Crime Prof Blog has been considering whether this indictment was used to take the head off the Department of Justice also.

Gristmill, an environmental news blog, has an interesting post on the inefficiencies of gasoline blended with ethanol and how more people are catching on:

In Oklahoma, some vendors are refusing sell ethanol-spiked gasoline. And they’re winning customers with signs like “No Corn in Our Gas” and “Why Do You Put Alcohol in Your Tank?” the Times claims. In Oregon, new rules requiring the state’s fuel supply be E10 — a mix of 90 percent ethanol and 10 percent gasoline — are being associated with sputtering boat engines and failing weed whackers.

Used under a Creative Commons License. "Gasohol (Ethanol)" by Todd Ehlers (via Flickr).

The idea that ethanol is less efficient than straight gasoline is easy to document: drive your car to or from a state with an ethanol blend from one with the opposite. Check your milage going either way. Even with other factors (such as wind), you’ll notice a marked difference. I did this at the beginning of the month, travelling from the Minneapolis area to Nebraska and back.

This is nice to hear, since I wrote on this back in April. And my accounting theory professor railed on it numerous times last fall. Gristmill also gets into it. What makes this policy so sickening are the huge amounts of taxpayer dollars being poured into a policy that raises food prices. This effects our nation’s (and the world’s) poorest people–not exactly something any politician would consider politically expedient. Portfolio.com’s Felix Salmon is writing today with regards to a World Bank report sayng that:

The combination of higher energy prices and related increases in fertilizer prices and transport costs, and dollar weakness caused food prices to rise by about 35-40 percentage points from January 2002 until June 2008.

Salmon also notes:

According to Chakrabortty, World Bank president Bob Zoellick tried to suppress publication of the report – something which, if true, probably only served to draw further attention to it.

Its not exactly like I was expecting a World Bank president clean of politics.

Can you buy expansion packs?

Constructable Drinking Straw.

An interesting bit from the Freakanomics blog at the NY Times, which pointed out some of the companies mentioned in the book Good to Great:

[...] I began reading the book on the very same day that one of the eleven “good to great” companies, Fannie Mae, made the headlines of the business pages. It looks like Fannie Mae is going to need to be bailed out by the federal government. If you had bought Fannie Mae stock around the time Good to Great was published, you would have lost over 80 percent of your initial investment.

Another one of the “good to great” companies is Circuit City. You would have lost your shirt investing in Circuit City as well, which is also down 80 percent or more. Best Buy has cleaned Circuit City’s clock for the last seven or eight years.

It seems the lesson that should be drawn from this is twofold: the stock price does not necessarily reflect a good (if high/rising) or bad (if low/falling) company and it depends on which time period is observed. Maybe Good to Great needs a second volume for co’s dealing successfully with this period. Maybe these companies indicate a systemic problem.

At the base of it, Fannie Mae (details on the scandal are near the bottom of the Wikipedia entry) should have been cut from the book when the company’s leadership (Raines, Howard and Spencer) were accused of 101 counts of manipulating earnings for the sake of their bonuses. Surrounding this was also a $6.3 billion earning restatement.

Also, this may be a lesson that serves to discourage people from buying best-seller management books.

The Management Blog at the Financial Times has an interesting post on a recent SEC complaint and subsequent settlement. The gentleman who settled was said to have covered up his work (normally checked via printed versions of spreadsheets) by using white text on white backgrounds and hiding columns.

The meat of it:

The SEC claimed that Mr Hirth – whose lawyer declined to comment this afternoon – exploited the fact that accounting checks used printed copies of spreadsheets rather than on-screen versions. It alleged that Mr Hirth used a “hide” function on his spreadsheet program that meant certain fictitious entries were invisible when printed.

In another spreadsheet, the SEC claimed, the company’s running tally of expenditure on commissions was distorted by a $4.1m cell entry located well away from the other figures. Because it was in white font on a white background, this entry – which had no basis, according to the SEC – could not be seen when a hard copy of the spreadsheet was printed.

This is interesting. Yet another addition to an auditor’s constant need to look for reasonableness of materials. All auditors should still foot any column and subtotal any row of numerical information submitted by a client. They also look for entries on non-business days (such as Christmas Day, New Years Day, Independence Day, etc.), strings of zeros (“000’s”) and other simple-looking numbers that normally don’t appear in business. Now auditors (and anyone reviewing financial work) should be selecting the entire worksheet and setting all of its text to black. Double-checking formulas may not be out of the question.

The comments, as in many financial blogs, are filled with good commentary. Most notably from Grenville Croll, EuSpRIG Chair, who lists a number of helpful links:

You can find ways to avoid spreadsheet risk if you look at the non-profit European Spreadsheet Risks Interest Group (www.eusprig.org).

EuSpRIG offers Risk Managers independent, authoritative & comprehensive information on Spreadsheet Risk Management. You can see published peer-reviewed conference proceedings on Cornell University’s moderated scientific repository www.arxiv.org

Some relevant papers:

On the problem of Spreadsheet Errors: http://arxiv.org/abs/0802.3457

On the Impact of Errors: http://arxiv.org/abs/0806.3536

Protecting Spreadsheet against Fraud: http://arxiv.org/abs/0801.4268

On the Scale of the problem: http://arxiv.org/abs/0709.4063

Testing Spreadsheets: http://arxiv.org/abs/0807.3187

Also, “G. Moore“:

Yet another example of why firms need to implement and control accounting and reporting systems that actually do accounting and reporting. The case here, most probably, is of yet another firm that cut corners on their system implementation/process and accepted having to finish the (reporting, etc.) job in Excel. There really is no reason to do any formal financial statement publication via Excel. Seriously, a $150 off the shelf accounting package can provide both reasonable reporting AND an audit trail.

And finally, “Chris Wilson” who rather negatively notes:

[...] when I worked at a Big Four accounting firm (tax, not audit), the culture from the manager level up was always on hard copies, always purportedly on the big picture. I sometimes got the feeling they felt they were entitled to be so far removed from the actual work because of their position on the totem pole. At any rate, the only hope for quality control on spreadsheets was in junior level peer review, and I imagine that’s true at a lot of firms.

Nasty. Just another reason to look closely at the numbers (and those that might not be visible).

Even if it takes a few cups of java noir.

Here’s one of the most recent “Indexed” from Jessica Hagy:

Thought you had a fixed rate, didn't you?

Its important to note this so simply (and for a second time this week): know what your security is.

Ann Althouse has an interesting take on this NY Times article (“Literacy Debate: Online, R U Really Reading?”). She certainly thinks that it is different, but that reading books is not the only or best way to read. What is particularly interesting is this quote:

I definitely think that reading on-line restructures your brain. That may be bad in some ways, but it’s got to be good in others. In any case, it’s where I am now. I still read books, but I read them differently, for example, I cut to the essence quickly and spring into alert when I detect bullshit. I’m offended by padding, pedantry, and humorlessness.

This reflects well with me. I am a voracious reader of what I call “current affairs”. This ranges from political and market/economic news to its in-depth analysis. I enjoy diving into a book and the different style it presents in comparison, but only when I can devote large chunks of time to it (such as when I’m on vacation, sitting on a beach or poolside).

In the same way, while in graduate school, we had a large amount of required reading from a variety of sources: papers, case studies, texts, the Internet, etc. After a short while, I was able to adopt much of my Internet reading style to these different media to absorb most of the authors’ discussion with minimal reading of the superfluous.

One thing that you learn to be comfortable with, when reading via the Internet, is the variety and quality of sources. A reader, as Althouse alluded, is stretched to quickly find the base meaning and filter for bias. (My good friend Paul blogged regarding a web reader’s attention span here, as it applies to the web marketing of churches.) This can be applied to a variety of sources, but can make longer passages and books difficult. As it says in the NY Times article: “‘It takes a long time to read a 400-page book,’ said Mr. Spiro of Michigan State. ‘In a tenth of the time,’ he said, the Internet allows a reader to ‘cover a lot more of the topic from different points of view.’”

You also find that a great writer can make subjects that traditionally are dry and boring quite the opposite. One of my favorite personal blogs is James Lileks’ Bleat. He talks about all sorts of odd things in his daily entries, but his observation of them is what’s interesting. This isn’t literature out of some musty (or brand new, tough-to-hold-open) volume, but it is still great writing that is easily available to me.

This article gives rise to a number of questions for readers:

• What are your thoughts on Internet reading?
• Do you think, as a community of bloggers/readers, we are merely confirming our own beliefs in posts such as this and Althouse’s?
• Does it bother you that complex ideas tend to be so heavily summarized on the web (or do you subscribe to the idea that brevity is the soul of wit)?
• How would you describe your reading style (does it differ in terms of the media from which you are reading)?

Please discuss these in the comments.