Day 17 – Happy 40th Alfonso!

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40th Birthday is a big deal for most folks.  Alfonso (our youngest living group mate) turned 40 today.  Hopefully, we were able to do a good job at helping him celebrate.  Here is what his b’day cake looked like.

alfonso bday cake

The real celebration will be dinner on Saturday at a Spanish restaurant in Boston.

The day today had a theme ‘Global Financial Crisis’ and had 3 specific cases on the subject.

The first one was State Street Corporation – This case tried to highlight the high degree of discrepancy between a firm’s actual position vs. what is LEGALLY shown on its balance sheet and income statements.  It is shocking to see the difference.  Fair Value Accounting principles are quite scary in this regard.

The US Current Account and Deficit was the subject of the second case and the situation poses an interesting dilemma for the world.  It also makes to think long and hard about what disservice the current situation of consumption, debt, trade imbalance is doing to the younger generation.  The vicious cycle I talked about yesterday is a difficult thing to break out of.

The day ended with a lecture/discussion by David Moss.  Extremely informative session which went through the explanation of the Sub-Prime crisis and how that blew up into a global economic crisis.  The Crisis of Confidence (lack of that is in the large financial institutions) – Lehman, AIG, Bear Sterns and the list goes on…

The role of the rating agencies (Should be shot!), greed of loan brokers and originators and excessive leverage of capital contributed heavily to the crisis.

Mr. Moss’ advice if I understood it correctly:

Bring an element of regulation – Self regulation by disclosure such that the big companies have to disclose their assets OR get completely  regulated.

Here is David Moss – Very impressive.

David Moss

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