2 October 2018 FT — Articles to Read

2 October 2018


ENRON!  (Bet that got your attention! :))  In August 1999 I interviewed, and was offered, a position with Enron.  The position was Manager of Model Development, i.e. pro forma development, for Asia, Africa, and Australia.  I turned down the position due to salary.  However, I just found, see attached, the modeling examination I was provided in Houston as part of the interview process.  The modeling test was four hours and every 10 minutes, I am NOT joking, you were interrupted and walked around the building.  Enron’s thought was that one never gets an uninterrupted 4 hours to model.  My response when told this was, “Who will interrupt me between 2am and 6am.”  They did not comment.  Within the four hours the entire model was completed WITH US GAAP compliant financial statements, i.e. Income, Statement of Cash Flow, Balance Sheet (which incorporated the Statement of Retained Earnings), Depreciation and Tax pages.  I provide this as, I just found it while cleaning my office, an example of where, I believe, new graduates should be regarding their modelling skills.  Enjoy!


Question: According to MSN: Money, what are five suggestions that can earn more money so one can get on the path to true wealth?


IMF picks its first female chief economist – Pg. 2

–          A US and Indian citizen, Ms Gopinath grew up in India, received her Ph.D. from Princeton University and worked at the University of Chicago before moving to Harvard

–          She is best known for her work on exchange rates, writing recently that the gains to flexible exchange rates “are less that you think” – a view that will be challenging to the IMF, which traditionally supports the policy

–          …her research has shown that currency depreciations are ineffective in stimulating exports in most countries because goods are overwhelmingly invoiced in dollars.  With a “dominant currency”, export prices do not fall when the exchange rate changes and so export flows are quite unresponsive to exchange rates.  Imports often fall due to a lack of purchasing power in dollars


The US must hold firm on bank capital rules – Pg. 9

–          Few things are more complex than rules designed to constrain excessive borrowing by large “systemic” financial institutions.  There are “leverage ratios” – relatively simple metrics that require a bank to hold a minimum amount of equity relative to total assets – and “risk-weighted ratios” that specify equity minimums based on the perceived riskiness of a bank’s holdings

–          Tough capital rules are a competitive advantage, not weakness

–          Thick capital buffers keep the banking system functioning through economic cycles.  Every dollar reduction in bank capital weakens the public’s protection against big failures

–          The fed should be free from political influence in the exercise of both monetary and regulatory policy.  The Federal Reserve Bard has autonomous funding and lengthy terms so that its members can withstand the destructive animal spirits of politicians up for re-election


Answer: (1) Negotiate your salary; (2) Take on a side hustle; (3) Improve your skills (Prof Note: Personally, raise your skills to the level that your employer worries you will leave rather than you worrying they will eliminate your position!); (4) Invest in income-producing assets (Prof Note: Can you say, “Real Estate”?)