Archive for February 28th, 2008
Filed under: Budgets, College, Ripoffs and Scams
 I used to be an English instructor at what Penthouse forum would call “a major mid-Atlantic university.” One of the things about teaching English is that it’s impossible to escape the high cost of books. Unlike PE teachers, art professors, or the guys who instruct underwater basket weaving, English teachers have to assign texts, which means that our students end up having to lay out a lot of dough.
I fought against this by carefully choosing my books. Whenever I assigned a text, I would look at all the available editions and think about the benefits versus the costs of every one. I often used xeroxed duplicates of stories or put reserve duplicates in the library to reduce my students’ textbook burden, and prided myself on the relatively cheap cost of supplies for my classes.
One year, attempting to standardize its introductory classes, my department developed an in-house textbook. Initially, using the book was a voluntary choice, but over the years, the department textbook became required for every freshman English class. For a while, this wasn’t too much of a problem; the textbook was pretty decent, and I can honestly state that it helped my students. In my final year, however, the department came out with a completely worthless edition of the damned thing. It cost $90, and I was required to assign it in my classes. In my last semester, I decided against using it, which earned me some stink-eye from a few colleagues, but little else. On the other hand, I had already announced my decision to leave teaching.
One of the reasons that my bosses were so adamant about the textbook was the fact that the publisher kicked back a percentage of the profits from each copy sold. This money ended up funding department allows, small scholarships, and other worthwhile programs. At least, that’s what we were told; I never saw any numbers on the actual disbursement of these impressive funds.
I was somewhat disgusted about all of this, seeing it as a major sell-out. While I appreciated that the money generated from the textbook made it possible for the department to do all sorts of wonderful things, I also am a strong believer in the freedom of choice and an open market. By giving the department textbook a monopoly, my bosses were discouraging competition; this became particularly troubling when the new, miserable edition was released.
When I told my wife about this, I received a major wake-up call. As a textbook buyer for the university, she had seen deals that made my department’s collusion look like child’s play. For example, one program required that all its students buy a textbook that had been written by the department head. Each year, the head wrote a short teaching insert, which meant that previous editions of the book were useless. This, in turn, minimized textbook buyback and the loss of revenue caused by used books. The head of the department was paid more than $200,000 for writing the original book and received a significant sum for each insert that he authored. This deal was far from uncommon; in fact, academics and publishers had made devil’s bargains throughout the university.
As my colleague Zac Bissonnette mentioned in an earlier post, one solution to this scuzzy little process is to rent textbooks. As he pointed out, renting books significantly reduces the cost of texts; the trouble is that, in spite of the excesses of the publishing industry and academia, textbooks can be outstanding resources. Even now, years after I left school, I still have some of my undergraduate textbooks and use them for reference. Returning textbooks at the end of the semester might be a fiscally-sound solution, but it seems a tiny short-sighted.
One solution that I proposed to my students was sharing textbooks. Not only did this encourage them to get to know each other, but it also helped offset an nearly back-breaking expense. At the end of the semester, the textbook pair could negotiate over who got to keep the book. One partner would get a textbook, while the other would get a tiny bit of money. Many of my students followed this recommendation and found that it worked well.
Another solution that I suggested was that they use ABE books, a site that grants users to search the stocks of over 19,000 independent booksellers. ABE’s textbook prices are often comparable to the cost of book rental, with the added benefit of allowing the buyer to keep the book.
Textbook collusion is a major problem and it’s only getting worse. For publishers, students represent a huge captive market, and the lure of filthy money is an irresistible temptation for many underpaid academics. Until Universities enact ethics rules for textbook selection (and, by the way, I wouldn’t hold your breath), it will be the responsibility of savvy students to ensure that they don’t get screwed.
Bruce Watson is a freelance writer, blogger, and all-around cheapskate. He never pays retail for his books.
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Posted by: in Money News
Filed under: Forecasts, Other issues, Bad news, Management, Employees, Politics, Headline news, Recession
 Just last week I reported about the insolvency problems in New Jersey to Walletpop readers, see: The snowball starts in New Jersey. Now, that nasty old snowball has streaked across the country and landed in the California suburb of Vallejo, wreaking havoc on the local government there. CNBC reports that Vallejo Councilwoman Stephanie Gomes says “Our financial situation is getting worse each single day”. Ask not for whom the bell tolls, it tolls for the heavy handed labor unions which have coerced sweet pay and benefit packages for the 30% of our workforce which is supported via tax dollars produced by the rest of us who actually make things.
The insolvency of Vallejo should come as no massive surprise, and in fact Vallejo is just the leader of what will become a very huge pack. Before the end of this year I imagine the entire state government of California will be in tears due to a lack of spending cash. You’ve been warned, it’s to become a nationwide trend.
We just can’t anticipate that private sector declines will leave the government sector untouched. The toughest part is that there’s nothing government agencies can do about it, except to cut spending or raise taxes. Local governments are in the business of taking constructive dollars from the people who created them and then throwing them into the bottomless pit of entitlements, waste and graft. Now, the chickens have come home to roost, and they’re huge, mean, unsightly chickens at that.
So, cry me a river Vallejo. You’ll soon be joined by the rest of your once hearty say.
Boondoggled naysayers have been laughing in my face for years while claiming that local governments can’t go bankrupt. You can’t however, collect taxes from people who aren’t working, and foreclosed properties don’t generate much in property taxes.
Guess who’s laughing now.
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Posted by: admin in Today News
U.S. Stocks Tumble on Recession Concern; JPMorgan, AIG Decline
Bloomberg - The KBW Regional Banking Index declined 3.2 percent as all 24 of its members fell. Moody’s Investors Service downgraded eight regional and community banks including Susquehanna Bancshares Inc. and Trustmark Corp., citing possible losses on commercial
Investors say lax oversight cost them millions
Miami Herald - Stockbroker Gary Gross wiped out the investment accounts of dozens of people in risky, volatile securities while racking up large commissions for himself, according to arbitration complaints. When stockbroker Gary Jay Gross asked regulators in Florida
Australian Bonds Will Outperform New Zealand Debt, ANZ Predicts
Bloomberg - Feb. 29 (Bloomberg) — Investors should purchase Australian 10-year government bonds instead of similar-dated New Zealand debt because yields on the two securities have converged, according to Australia & New Zealand Banking Group Ltd. Australian bonds
Wall Street Burned By Slowing Economy
Forbes - Fed Chairman Ben Bernanke, who visited the Senate Banking Committee to offer his monetary policy report Thursday, held firm to his position, repeating that he believes the U.S. economy will skirt a recession, despite the negative economic indicators
MBT Financial Corp. Announces Quarterly Dividend
MSN MoneyCentral - MBT is a full-service bank, offering a complete range of business and personal accounts, credit options, and phone and online banking services.
Analysis: Fed chairman learning to navigate treacherous economic and
CNBC - That doesn’t mean he gave either side all that they were looking for during Wednesday’s hearing or a follow-up performance Thursday before the Senate Banking Committee.
Bernanke doesn’t see return of ’70s woes
Forbes - I don’t anticipate stagflation,’ Bernanke told the Senate Banking Committee. ‘I don’t think we’re anywhere near the situation that prevailed in the 1970s.
Harris Helpful Hints: Mortgage Safety Tips for Homebuyers and
MSN MoneyCentral - As the volatility of the mortgage industry continues, homeowners and prospective homebuyers are more apprehensive than ever,” said Tim Crane, President, Harris Community Banking.
UPDATE 1-Swiss bank Baer defends Web site shutdown
Forbes - ZURICH, (Reuters) - Swiss bank Julius Baer , facing an international backlash, defended Thursday taking legal action to shut down a Web site that published what the site said were details of secret bank accounts linked to tax- avoidance schemes
Bernanke States Slowdown, Inflation Complicate Policy (Update1)
Bloomberg - We’ve simultaneously a slowdown in the economy, stress in the financial markets, and inflation pressures coming from these commodity prices abroad,” Bernanke said at the Senate Banking Committee.
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Filed under: Home, Ripoffs and Scams, Fraud
 Sure, we’re always writing about identity theft, but it’s nearly National Consumer Protection week (during the week of March 2-8), and so I figured I ought to check in with fraud prevention expert Judd Rousseau, COO of Identity Theft 911, and see if he has any useful information on protecting oneself. And what do you know? He does. Rousseau offers these five tips for avoiding having your identity stolen, and you know, they’re pretty interesting:
If you have one shredder, it belongs in your — kitchen? Yep. A Staples study found that most junk mail ends up in the kitchen trash, not in the office.
Don’t pay money to get money. According to Rousseau, the most common scams right now involve asking consumers to wire money for complex, convoluted and even occasionally believable reasons, and for the consumer’s trouble, they will, of course, get a much more massive amount in return.Opt-out of pre-approved offers. You knew about the Do Not Call list. Well, if you call 888-5-OPT-OUT, you can dramatically reduce the number of credit card offers you receive in the mail. For those you do receive, go to the kitchen shredder. (I will be a responsible parent now and will say that if anyone does decide to put their shredder in the kitchen, keep it unplugged and away from children. This will also save you, one groggy morning before you’ve had your coffee, from accidentally shredding the toast and buttering your junk mail. It could happen.)
Check your credit reports regularly. OK, you knew that, but what about checking your kids’ credit, or your aging parents? After all, scam artists tend to target seniors and kids.
Go to ConsumerAffairs.com. Why? They’ve a cheat sheet on last year’s top ten scams of 2007. That way you can get a sense of what the con artists are trying. Really this list of scams is fascinating reading, and it’s scary what they’ll try, from fake lotteries to even sending e-greeting cards that, when you click on it, you wind up giving a hacker access to your hard drive.
Geoff Williams is a business journalist, primarily for Entrepreneur magazine, and the author of C.C. Pyle’s Extraordinary Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale, 2007).
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Filed under: Raising money, Private equity industry, Investments
Egyptian buyout firm Citadel Capital may actually be coming public. A report out of DealBook from the New York Times discusses that the firm plans to raise $150 million to $200 million from a public offering later this year.
The firm currently manages $7 billion in assets and intends to use the capital for ventures in the energy, food and manufacturing industries.
This article also noted that according to managing director Mr. el-Houssieny, Citadel is in discussions with four undisclosed international banks regarding the offering. It also notes that it is looking into whether it should list in London, Cairo, or Dubai.
In 2007, the company bought Rally Energy Corp, a Canadian oil company, for $849 million and was involved in the Egyptian Fertilizer Co.’s $1.41 billion sale.
This would be an interesting change of pace. Imagine a private equity and LBO firm in the U.S. announcing it would come public. They would be told to go away until next year. Now imagine if you were selling this only to Americans and it was an Egyptian company wanting to do this. Maybe the decoupling argument isn’t as ludicrous as we think.
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Filed under: Venture capital industry, Private equity industry, Investments, Public or private?
There is an interesting article out of the International Herald Tribune that is discussing the competitive environment in Asia that has essentially pitted private equity investment money against venture capital investment money.
As economies in South Asia have rapidly expanded over the last decade, U.S. investors have jumped at the opportunities to capitalize on the growth. However, venture capitalists and private equity investors alike have learned that they have to approach investments more cautiously than they do in the United States. Until the markets in South Asia mature, U.S. investors will likely continue to tread carefully when investing in early-stage growth opportunities.
This article notes that investors are putting their money into companies that have already tested the waters, avoiding early-stage investments that are subject to higher risks and regulatory issues. The size differential here is also surprising when you read into it. Initial funding for a deal in China and India runs much higher, up to $50 million, compared to $2 to $12 million in the United Says, because the companies are often already in business, requiring more first-round capital. As a result, the distinction between private equity and venture capitalists is narrowing as they compete for the same mid-stage or later-stage deals in India and China.
In the U.S., the policies are much more clearly defined. Venture Capital firms (and angels) are the ones approached here for seed, start-up, and early stages of financing for emerging companies. Private Equity firms purchase established businesses that either can be turned around and run more efficiently or they buy companies essentially for the cash flow streams.
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Posted by: admin in Today News
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