Monday, 27 July 2009

Government Financial Planning

A few random thoughts about financial planning, politics and me.

I care and I want my government to care about financial planning for our future.

I want to have confidence in my vote.

I want to share in the voice of my country and not have my money spent on stupid things.

I want to believe my leader fulfilled his service duties.

I want to believe he was elected in a fair way.

I want to believe the war reports and the war is not about oil (liquid money) or taking the media attention away from other important issues.

And I want to believe in the new McCarthyism against 'terror.'

I want to know people are not dying because of where I spend my money AND where my government spends my money.

I want the taxes taken out of my new job to support better public education and health.

I want to be kept informed.

I want to be certain of my leadership.

I care about my countries finances.

Monday, 7 March 2005

Consumer Lending and the Bankruptcy Abuse Prevention and The Consumer Protection Act of 2005

I don’t think there is anyone reading this site who has been fortunate enough to not need credit cards or loans at some point in their life. We’ve all probably had times when we were in the black, or nearly paid off, but I don’t think any of us has ever had the luxury of making a big purchase or taking a trip by simply peeling a few Benjamins off a fat money roll whenever we felt like it.

The reason we don’t have to sell our sisters or risk getting our thumbs sawn off by loansharks when times are tight is the miracle that is consumer lending. Banks issue credit cards and loans, giving us extended purchasing power and a grace period for repayment. In exchange for this generosity, we pay interest to the bank and adhere to a fair, regulated timetable by which we can repay our debts. Credit cards and loans not only enable us to buy a third TiVo or front the supplies for a competitive eating contest, they allow us to fiscially survive the unexpected and weather financially shaky circumstances like a recession.

It’s true that many of us have problems responsibly managing our finances, and in times when we’re working more and making less, living within our means often translates into going without much of what we want. But while some people are serially irresponsible and get themselves into insurmountable debt over bullshit like expensive clothes and entertainment centers, most people who are in financial trouble are doing no such thing. They play by the rules, work hard and save money, but are simply unlucky; faced with caring for a sick relative, an out of work spouse, a marital problem, these are not the callous throwaway dollars of a compulsive spender.

Credit cards companies know this better than anyone. They give money to get money. They set the rates, they levy the fines, they give you the rope to hang yourself with. They find you when you’re the most in need of a credit lifeline, and they carpet-bomb you with offer letters and pre-approved cards; and if you fuck up once, miss a payment or are late with a check, they will squeeze you, squeeze until there’s nothing left. And for the unluckiest among us, bankruptcy is the last refuge short of total ruin.

Today the Senate is voting on the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," probably the single cruelest piece of legislation I’ve ever heard of in my life (I’m sure I’m missing one or two that are even crueler, but I’m so angry I can’t think of them right now). The Rude Pundit has addressed this as ably as I ever could, as has Digby. But in a nutshell this bill, sponsored by Sen. Charles Grassley (R-IA, who should suffer anal warts for the rest of his days), would lift most of the remaining provisions that protect consumers from the usurious impulses of their credit card companies. It sickens me to outline the full details of this horrific piece of shit they call a Bill, so go read it yourself.

This affects you. I don’t care if you pay your bills a day early each month and seal the envelope with a chocolate kiss — we are all vulnerable to the unexpected, we could all fall on hard times, and we all deserve a second chance to set our lives straight. They want you to believe that this is only targeted towards those who abuse the system, and they are lying through their goddamn teeth. The same people — extremely rich people, mind you — who have no problem bailing out a badly indebted airline or a failing aerospace firm are saying that Americans flattened under the weight of crushing interest rates need to pull themselves up by their bootstraps? FUCK YOU. This is robbery, Robin Hood in reverse, a bag of cash torn from the hands of the most vulnerable among us dropped straight into the laps of the most vicious legal loan sharks in the country.

Read the bill, it’s probably too late by the time you read this, but shit, what else are you gonna fucking do at this point, yell at your cats? I did that already.

Sunday, 27 June 2004

Hostile Takeovers and Entrepreneurship

Corporate law professors are fascinated by hostile takeovers. My friend does an annual survey for the Corporate Practice Commentator to find the best corporate and securities law articles. In the most recent survey, there were 11 articles in the Top 10, and six of them focused on hostile takeovers -- including the article that my friend wrote entitled "Toward a New Theory of the Shareholder Role". Our preoccupation with hostile takeovers is now approaching the status of fetish. It is time, colleagues, to move on and start writing about myriad other important issues. If you are looking for new direction, I suggest following Ron Gilson's lead.

What do hostile takeovers have to do with entrepreneurship? In 1988 Fred Friendly did a series of videos, which he called "Ethics in America." One of those videos is the best television piece on hostile takeovers ever done, in my view. Called "Anatomy of a Hostile Takeover," the video has a panel of high-profile participants -- including Warren Buffett, T. Boone Pickens, Rudy Giuliani, and Joe Flom -- working through a hypothetical hostile transaction. When the moderator asks infamous "raider" Sir James Goldsmith to describe what he does, he compares hostile takeovers to entrepreneurial startups and asserts that "one is just as productive as the other." Fifteen years later, still riding the wake of the internet stock bubble, I miss Sir James.

You may be wondering why I have hostile takeovers on the brain today. Well, it's grading time at school, and I asked my students a question about the decision of the Delaware Supreme Court in Omnicare v. NCS Healthcare, where the Court held that deal protections devices were subject to "intermediate scrutiny" under the Unocal standard.

More specifically, the Court examined the combined effect of (1) stockholder voting agreements, pursuant to which two individuals holding 65% of the voting power of NCS stock irrevocably agreed to vote in favor of a proposed merger between NCS and Genesis Health Ventures, Inc.; (2) a provision of the merger agreement, expressly authorized under Delaware General Corporation Law § 251(c)), requiring the board of directors of NCS to submit the proposed merger for a stockholder vote, regardless of whether the board of directors continued to recommend the merger; and (3) the omission of a so-called "fiduciary out" clause, which would allow NCS to withdraw from the merger agreement if the board of directors of NCS concluded that its fiduciary duties required such action.

The majority opinion by Justice Holland focused on the fact that the proposed merger was completely locked up prior to the actual shareholder vote. Applying Unocal as modified by Unitrin (another horrible Holland opinion), Justice Holland concluded that the deal protection devices were both coercive and preclusive. He also wrote, in reference to the failure of the merger agreement to provide a fiduciary out, "We hold that the NCS board did not have authority to accede to the Genesis demand for an absolute ‘lock-up.’"

This is the latest in a series of absolutely awful opinions by Justice Holland, who seems to have no appreciation at all for the proper role of the Court in hostile takeover litigation. This follows MM Companies, Inc. v. Liquid Audio, Inc., where Justice Holland added another level to the "proportionality" prong of the Unocal analysis, making that standard even more incoherent than it already was. The only good thing that can be said about these opinions is that the Delaware Supreme Court is finally deciding that a board of directors might, in some hostile takeover contexts, breach their fiduciary duties.

Sunday, 20 June 2004

Financial Planning

Financial Planning

In general usage, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new business or product line, shares in an existing business, or real estate.

In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.

While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.

Business Financial planning

Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. The Financial Plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved.

The Financial Planning activity involves the following tasks;-

Assess the business environment
Confirm the business vision and objectives
Identify the types of resources needed to achieve these objectives
Quantify the amount of resource (labor, equipment, materials)
Calculate the total cost of each type of resource
Summarize the costs to create a budget
Identify any risks and issues with the budget set
Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set.