PAUL SAMUELSON: Financial crisis work of ‘fiendish monsters.’
With the financial crisis that started in the United States triggering a global recession, a Japanese newspaper reporter interviewed distinguished American economist Paul Samuelson (pictured) for his insights on what the world can expect in the days and weeks ahead.
The 93-year-old Nobel Prize-winning economist and professor emeritus at MIT emphasizes the need for stepped-up and well-planned government spending to tide over the crisis, while lashing out at the deregulation policy pursued under what he calls “extreme right, supply side economics” adopted by former U.S. President Ronald Reagan and maintained by George W. Bush.
Q: You have experienced and studied the Great Depression. What is the difference between the Great Depression and the current financial crisis?
A: Well, the present one in America is still primarily a Wall Street phenomenon. But right behind that is going to be a Main Street downturn, because all of the swollen population, aged 50 to 65, have lost from these subprime ridiculous mortgages.
They’ve lost much of what they’re going to need to retire. And when I say “lost,” it’s not something that the government can stuff back in. It’s gone. And, it all traces to bad deregulation, to incompetent appointments, to conflict-of-interests appointments.
Harvey Pitt, the first head of the SEC for George W. Bush was a lawyer to the four big accounting firms. The four big accounting firms do not deal from an honest deck of cards. They have tricks to keep things off the balance sheet and so forth. And, these are the new fiendish Frankenstein monsters.
Original here.
Are the days of the big accounting firms numbered?
Peterson thinks so. And he may know better than most, as a former general counsel at Andersen. In his latest post at Re:Balance, Jim suggests: “the bust-up figures would be as small as $560 million.”
He notes that Seidman already has a $521-million verdict pending against it. And just three or four years of sub-par profits could push enough partners to the doors that a firm could simply dissolve.
Read it all here…
In his the latest edition of his newsletter, the veteran accounting journalist and commentator Art Bowman says…
We go through cycles of self-delusion, sometimes too giddy and sometimes too glum. The next recovery lies in the ruins of the last recession. Free markets require rules. Without laws and courts, the market wouldn’t be free, it’d be chaotic. These are among the institutions that help create and safeguard great corporations. Measuring the success and failures of free markets often falls to CPAs. We’ve heard the call before and here it is again: We must hold ourselves above the fray, do our jobs to the best of our professional abilities with little regard for our personal rewards. It is our duty, our contribution to stability when others seek to cause chaos.
Subscribe today to the Bowman Accounting Report
Top management too often falls short.
Many CPAs are less than satisfied with the leadership in their organizations, a finding that may not be surprising. But it’s still disturbing.
Roughly 8 in 10 CPAs are reporting they are less than fully confident in the top management of their firms or finance organizations.
The study, “The Qualities of Leadership,” is part of the joint project between Capstone Marketing and Bay Street Group LLC into the “Seven Keys to Success in CPA Management.”
Participants of the study automatically qualify to see the top-line results. You can join the survey here.
Meanwhile, here are a few of the comments gleaned from early responses so far….
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Why do so many CPAs seem to not grasp that the most basic economic concept of supply and demand applies to our practices?
Joseph T. Eckelkamp
President
Eckelkamp & Associates, CPAs
Instead of continually lamenting shortages of qualified staff, we should recognize that upward shifts in demand curves (client needs) when supply curves (qualified accounting staff) remain constant/fall; or supply curves drop while demand remains constant/grows means prices should increase!!!
Profitability, not staff size, is the goal. If we don’t increase prices, we damage ourselves and the profession by chasing (and paying more for) staff to meet higher demand for our services. If your “factory” is operating at capacity, start charging more. Price increases yield pure profit while increasing billings by hiring more staff only fractionally increases profit while adding organizational risk.
Firms need to grow or they wither and die, but adding staff is NOT the only way to grow!!! I would much rather generate $200,000 of revenue using one person to serve 15 clients than I would using two people to serve 35 clients.
Editor’s note: This post first appeared as a comment, but it seems so trenchant and important that we are highlighting it as a guest post. — Rick Telberg
What you need to know to make your firm more effective.
What are today’s best leadership strategies? Join the study; get the answers.
by Rick Telberg/At Large
In these treacherous and tumultuous times, the difference between winners and losers – survivors and casualties — may well hinge on the qualities of leadership.
Some firms and finance organizations are already falling by the wayside. Others are clearly gaining new and powerful competitive advantages that could last for years. Some will flourish; some will perish.
But how do you navigate this transformational era? And how do you insure your own success and survival?
We took our questions to Bob Bunting (pictured), one of the profession’s most respected authorities on leadership.
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