Hellenic Budget

This past week, I was speaking to a fellow gym member about our respective vacation plans this summer and he mentioned he was mulling a trip to Greece in August.

But first he cautioned, he would have to severely tighten up what he termed his family’s “profligate spending” in order to be able to visit the Acropolis and Parthenon while sipping Ouzo and enjoying bottles of Agiorgitiko.

When I asked him how he planned to accomplish that, he said he had formed an austerity plan and was all too happy to share it with me.

First, he announced that he was suspending his membership to the health club for six months. Next up, he would hold off on a planned new car purchase and then stop paying into his 401(k). And that was just for starters.

Then, on Friday nights, which was his family’s regular day to “order out” for dinner, they would stick to fast food only.

Okay I told him, let’s examine each measure more closely.

Flash Forward

Flash Forward

This past week I was invited to participate in a podcast, with the topic being “Firm of the Future.”

I realize that theme has been ridden more than Seattle Slew lately, with anyone and anyone who classifies themselves as an “accounting expert” rendering an opinion.

In full disclosure, I have been historically bad at predictions, once to the point of drafting a letter to the head of programming at CBS television chastising him for attempting to bring a classic movie like M*A*S*H to TV. It will never work I warned.

I don’t think I need to tell you how that turned out.

But, undaunted by past failures, I forged ahead and tried to make my case. Now the accounting profession by nature has been historically slow to change compared to other fields such as legal and medical. Not so long ago a CPA’s idea of change was to swap out a red tie for a green one.

Now the American industrial landscape as a whole has a life support unit reserved for once dominant companies who neglected to embrace change and prepare for the future. Kodak for instance, which once had a market share of 90 percent, incredibly, refused to capitalize on a patent they initially had for digital photography.

Reader’s Digest, the monthly pocket-sized magazine, once read in 16 million homes, foolishly ignored the emerging threat of digital publishing. After filing for bankruptcy twice the company now has less than 700 employees.

But on to the future CPA firm.

Period, end of story.

While working out at my gym, I have some strict ground rules I adhere to.

First, I leave my mobile phone at home. I do not text between sets of exercises, nor do I want to field work-related phone calls. The hour is mine. Period, end of story.

Second, other than acknowledging fellow members with a brief greeting, I stay away from protracted conversations. What usually happens is that people will begin debating a certain subject (often controversial) and if you decide to participate, your workout is usually truncated in terms of time or diluted in terms of effectiveness. Again, period, end of story.

However, the other day as I was loosening up, two members on opposite sides of the political spectrum began arguing about the college loan crises. As many of you know, the issue has ballooned to quantum like proportions to the tune of $1.6 trillion in outstanding student debt.

Member A, a true Reagan conservative, pointed out that he dutifully paid back his loans, not only for his baccalaureate, but for a master’s degree as well.

Member B, not exactly a supporter of the current resident of the Oval Office, complained that his children are now in the hole for close to six figures in college loans and compounding the problem was that they have had difficulty finding jobs.

Now to be fair there are some sympathies to both arguments. As someone who like member A paid back his student loans, I can certainly relate to his frustration with the some of the 2020 Presidential candidates whose platforms include student loan forgiveness.

Conversely, I have heard similar complaints from folks like Member B about how their kids can’t find work. Now their chosen fields of study ranging from philosophy to anthropology certainly had something to do with their inability to land a job and they might have been wise to pick more employable courses of study. Or learn a trade. And I get that even if they do land somewhere, a good portion of their paycheck will go toward repaying tuition.

But again, what the present crop of candidates appears unable to grasp is that for every Millennial or Gen Y-er enamored with student loan forgiveness there are 3-4 like yours truly and member A who have repaid their debt obligations. And who do you think will pick up that repayment burden? Because when they claim the government will take care of it that’s Beltway speak for “taxpayer funded.” And for those of you who love numerical comparisons, if the student loan debt were to be bailed out, it would be TEN times the amount of the S&L bailout of the 1980's.

Let that sink in for a moment.

So, after much thought I have formulated a galactically simple solution to the college debt problem.

Ready? Here it is.

If you take out a loan.

Pay it back.

Period, end of story.

When I Was Your Age…

No one has ever mistaken me for even-tempered.

In full disclosure I have some pretty strong opinions on many issues, and, coupled with an Italian temper, it can make for interesting – some say heated - conversations.

But nothing fuels the internal debate fire when someone younger than yours truly re: Millennials or Gen Y’ers, complain about how hard their lives are.

Now most of us received the “I used to walk (add number here) miles to school in all kinds of weather lecture from their parents and how hard they had it. Some of us got it at 8, some got it at 18 – but eventually we all got it.

Those of us Baby Boomers likely remember playing on the monkey bars – no, not the “soft play” kind – but solid steel. If you fell off and were covered with bruises and cuts, your mother wiped away your tears sprayed on some Bactine and off you went. And I can’t even imagine the grief we would have gotten from friends had we showed up for a bike ride wearing a helmet. On weekends, we would show up only at mealtimes, our parents having not the faintest idea of where we were during the day.

So, when my children or their peers complain about life, I answer with one word – Smartphone.

Really. Smartphone.

Nice “Gig”

For those of us old enough to be in the workforce during the late 70's and early 80's, can you imagine uttering such phrases back then as “I got a text from ….” Or, “just email it to me.” How about “I received an invite from Facebook (or LinkedIn)?”

And lest we not forgot, “I now work remotely.”

Neither can I.

But let’s examine a word that was often used in the lexicon of conversation in any era, “gig.” Most everyone had a musician friend who bragged about playing or getting a “gig.” Or when someone landed a plum job, he/she was usually congratulated with a “hey, nice gig.”

Today, “gig” has evolved to a whole new career meaning, not to mention a skyrocketing separate economy. Roughly 57 million people are employed in the gig economy - temporary jobs or independent contractors such as Uber, Airbnb, Grubhub and TaskRabbit to name a few - which, according to projections, the gig sector will grow to more than $450 billion in just three years.

The advantages of a gig job are obvious – make your own hours, the ability to work for multiple companies at once etc.

But that is gradually changing as well.

A Forgettable Chapter in Corporate Accounting

Some 20 years ago, I was attending an investment conference in New York when I found myself in an elevator with a towering figure dressed in a long and wildly expensive overcoat with an unlit cigar in his mouth. I had been at enough of these things to know a VIP when I saw one. With a head of thick silver hair and an obviously manicured beard, I didn’t know who he was at the time nor did I realize how much of our editorial content he would later occupy.

It wasn’t until several years later when I read a profile in BusinessWeek did, I learn he was the chief executive of what was then a skyrocketing telecommunications company in Mississippi called WorldCom. His was a true rags-to-riches story, coming to the U.S. from Canada to play basketball at a small college and then investing in a chain of motels. His net worth was once estimated at nearly $1 billion. Many of you Baby Boomers and Gen Xers probably know, as the late Paul Harvey used to say, “the rest of the story.”

In essence, a series of accounting “irregularities” forced the company to restate its earnings by several billion dollars and which eventually morphed into a fraud to the tune of $11 billion. The well-dressed executive and my elevator companion, Bernard J. Ebbers, received a 25-year prison sentence for securities fraud and filing false reports. Thousands of employees lost their pensions and savings and the company soon padlocked its doors.

Until one Bernie Madoff would command similar headlines some six years later with a scandal whose scope made WorldCom seem like a Times Square shell game, WorldCom was the largest fraud ever perpetrated in American business annals.