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November 30, 2005
Caps Off to the Auditors
The Wall Street Journal reported that Sun Microsystems has disclosed a very intriguing "auditing liability cap" arrangement with Ernst & Young. Effectively this means that if Sun reports gross mistatements in its financials, it can't turn around and sue the heck out of its auditors when investors dump the stock upon discovery of the errors. Jack Ciesielski makes a great point in his blog that this may shift the onus back to the corporation to provide better results in the first place instead of depending on the auditors to sniff out problems. Watching investors' reactions to this kind of arrangement in the future should give an idea of whether it will turn out to be better for the financial community.
Posted by Michelle Smith at 08:40 PM | Comments (1)
November 28, 2005
Economists and Fine Upholstery
If academic economists had report cards, their schedules would be cluttered with numerous parent-teacher conferences these days. Progress has gone from stellar to mediocre, and the lacking signs of future potential would be enough to rouse any worried observer’s attention.
Posted by Michelle Smith at 03:08 AM | Comments (0)
November 13, 2005
France's Conflict with Reality
What do raging fires and overturned Peugeots reveal about France’s economy?
The riots that started with two Arab boys being electrocuted after supposedly running from the police have origins much deeper than anger over these specific deaths. The riots, soon approaching a duration of twenty days, have been fueled by the decades-long conflict between France’s social model and reality. This conflict makes it nearly impossible for those starting with disadvantageous backgrounds to succeed, and the two boys’ deaths were the straw that finally broke the poodle’s back.
Posted by Michelle Smith at 02:04 PM | Comments (2)
November 01, 2005
China's 8-Ball
One of the benefits of having functioning brain cells during such an important period in China’s history is the educational entertainment of all the lofty theorizing. Everyone likes to talk about the higher meaning of what seems like every transaction southeast of the Great Wall. Last week was another example, as reports about Thursday’s initial public offering (IPO) of China’s Construction Bank (CCB) were scrutinized with so much fervor that you’d think China’s stock prices held the secret to next year’s Super Bowl winner or tomorrow’s PowerBall ticket.
Posted by Michelle Smith at 07:24 AM | Comments (0)