Mind Over Money

Nancy Anderson, columnist

Jamie Dimon, CEO of JP Morgan, feels really bad about the mistake that occurred on his watch. He felt so bad that he fired a couple people, and he actually apologized to shareholders. I’m sure that an apology from Dimon is like finding a real diamond in the garbage heap — rare, real rare.

Dimon has been vocal about any attempts to rein in bank trading. Speculative trading was the straw that broke the camel’s back and led to the Financial Crisis of 2008. According to Dimon, there is no need to formally limit speculative trading. That Volker Rule? Just another boil on the backside of capitalism. A nuisance. A hindrance. Couldn’t all the bankers just hold hands and agree to play nice?

That mistake cost JP Morgan $2 billion. While that’s chump change for JPM, it’s nothing to sneeze at in my book. And he was sorry, really, really sorry. Dimon promised shareholders it would never happen again, and he even conceded that a few teeny tiny regulations might be in order.

The shareholders responded by awarding him a $23 million pay package for next year. I had no idea messing up could be so lucrative!

A strong financial system is critical for economic development. We need a well-oiled and well-functioning Wall Street, but we don’t need another 2008. Reasonable regulations offer assurance to all participants that the game is not rigged but is fair and that taxpayers won’t find themselves on the hook again for some colossal error.

Financial regulations are typically born out of a crisis. Sometimes, we overreact. Sometimes, we regulate for what happened yesterday and forget to look for the next problem. And sometimes, we don’t regulate enough and end up with a case of history repeating itself. Maybe this little $2 billion dollar mistake will get our attention.

They’re calling the errant trader “The London Whale.” Wonder if Jamie feels like he’s been swallowed whole? Of course, with $23 million to keep him company, he can stay in that belly a long time!

 >> Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Nancy Anderson, columnist

Tunica is a strange place. I can hardly wrap my brain around this little spot on the map.

A few weeks ago, I traveled there to speak at a conference. We ended up taking the long route through Senatobia, winding on a country highway and passing farms and pastureland along the way — a scenic ride. Even after rolling into town, I couldn’t see the bright lights of the casinos for a while, just acre upon acre of cultivated flat land, good Delta land.

The roads through town were newly paved. We passed two brand new schools. Dollar stores dotted the highway. Before long, we made the turn into casino row. Further into the Delta landscape, we came upon the garish lights of a Vegas wannabe. Billboards declared each one the better choice for the avid gambler — looser slots, higher payouts.

Dinner that evening was in the upscale Jack Binion’s Steakhouse. Were we really still in Mississippi? The bill would have shocked my Mississippi relatives. The parking lot was full of Tennessee tags, hill people heading down the flat highway to try their hands at the blackjack tables. Walking across the casino floor, I saw a lot of wheel chairs and oxygen tanks.

I’m delighted to see this little town find its way out of the ditch — Sugar Ditch — and back to some semblance of prosperity. The casinos mean revenue for roads and schools and other improvements. More importantly, they mean jobs. Delta folks from all over travel up Highway 61 to the gambling Mecca for a chance at a better life.

But the vestiges of Sugar Ditch are not totally gone. Shacks still sit amidst shiny, new structures, and I wonder about the longer term effects of a casino driven economy. Tunica won the lottery when the casinos came to town. I’m hoping they are managing their winnings for the day when their luck runs out.

>> Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Nancy Anderson, columnist

Well, the legislators have packed up and gone home. As I survey the wasteland of passed and failed bills, I wonder if these folks have a clue about the dire straits many Mississippi families find themselves still in. While they were arguing about immigration and charter schools and abortion, while they were poring over redistricting maps and the power of the Attorney General, did they notice we’re still trying to dig out of the Great Recession?

Did ANYthing they did over the last several months create even ONE job? Did they lay the groundwork for future economic growth? Did they establish a framework to help the next generation of Mississippi children compete in the global economy? Nah.

The one bill that could have proved a win-win for the economy AND education was killed, stomped into a lifeless pile before it had a chance. Lt. Gov. Reeves turned his back on a bill that would increase our bonds to allow for construction and repair at Mississippi schools. Reeves said, “With rates as low as they are right now, should you go buy a $2 million house?”

Of course not, but we’re not trying to buy a $2 million house in Mississippi. We’re still trying to get out of the house trailer. Reeves should know that, sometimes, taking on debt makes perfect sense. Businesses borrow when they can produce a return on investment over and above the cost of that money. That’s basic finance.

Rates ARE at historic levels, and we need jobs. Those bonds would set bulldozers in motion and put construction workers back in the saddle. Every project would be its own stimulus, as local businesses blossom with the influx of workers. While revenue projections are creeping up, the use of bond money would really pump up the volume. The cost of the bonds would be more than offset by the economic benefits.

And, oh yeah, the schools are desperately in need of maintenance assistance — the win-win!

House Speaker Gunn said, “The failure to pass a bond bill is not the end of the world.” Apparently, Reeves and Gunn are both prone to hyperbole.

Of course it’s not the end of the world. It’s just the end of the line for Mississippi… again.

 >> Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Nancy Anderson, columnist

John Edwards is a worm.

That may be overstating his humanity. The one-time rising star in the Democratic Party has turned out to be another empty, narcissistic pretty boy, with the morals of an alley cat. Combine money, power, and a dose of boyish charm, and you’re bound to end up with a sex scandal. Just ask Bill Clinton.

But when you add in a dying wife, it takes it to new lows. I couldn’t dislike this man any more, and I have my doubts he’ll ever redeem himself. But is he guilty of a crime?

The accusation is that he used campaign funds to cover up his indiscretions. Did he do this to keep his wife in the dark, or did he do it to keep the voting public in the dark? Was the money given to him directly, or was it routed through a campaign account?

Technically, he may have committed a crime. After all, this was pre-Citizens United. At the time, rules and regulations were on the books that prevented a candidate from using campaign funds for any personal gain.

Now, all this seems much ado about nothing. This is the age of the Super Pac. Political pundits only need to start their own Super Pac, set up a website for donations, and then live off the proceeds in any way they choose. Donations to these organizations are unlimited. No one has to disclose the donors. Beneficiaries, basically, have carte blanche on the use of the funds. It’s all perfectly legal in our new, enlightened age.

If the Citizens United ruling were made retroactive, would we even bother spending millions to prosecute this worm? Or would we just recognize him as another snake in the grass of politics?

John Edwards is a worm, but he’s not a criminal. The real crime is that a few, well-heeled people can now wrest democracy from the hands of the voters. Who will prosecute this case?

>>  Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Nancy Anderson, columnist

We have a game we play when we head back home for a visit. How long before my mother starts railing against the immigrants? Personally, I don’t know what the fuss is all about. Of course, my job is not in danger due to these outsiders. I’m not bothered by Spanish exit signs in Wal Mart, and I haven’t been affected by real or imagined crime waves due to porous borders.

But say the word “immigrant” in some quarters, and all heck breaks loose! I don’t get it. We’re an immigrant nation. While I know the difference between legal and illegal, both come here for the same reason my ancestors landed on these shores. They want a better life. They want a piece of the American dream. They are literally dying to get into the land of opportunity.

Does that diminish MY American dream? On the contrary, it bolsters it, but look back at our history, and you’ll see a common thread when it comes to immigrants. Each new group is reviled by those already here. Are we afraid of being surpassed in achievements by these intruders? Are we afraid of losing our societal place? Are we afraid of diminishing political power? Or are we just afraid of “different?”

Dr. Condoleeza Rice visited Mississippi College and took questions from our students. One asked about the internal threats faced by the United States. Dr. Rice turned to the issue of immigration. She said that we should be careful not to make immigrants the enemy. In the 21st century, the success of our economy depends on how we are able to use human capital. From the brilliant software engineer to the laborer looking to move from “fifty cents an hour to $5.00 per hour,” these new Americans can add value.

America is a dynamic country, evolving with each new wave of immigrants. If we allow our fear to keep us from addressing this issue in a reasonable way, we will stop the evolution and become stagnant. We will only hurt ourselves in the process.

>> Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Nancy Anderson, columnist

I’m shocked!
The governor just signed a bill to allow beer in Mississippi to increase its alcohol content from 5 percent to 8 percent. Where were all the good Baptists when this was going through the legislature? Were all the temperance women otherwise occupied when the vote was taken? Did the citizens of the dry counties drop the civic duty ball?
My, times have changed. I grew up in a teetotaling household. I heard things like, “One drink can turn you into an alcoholic,” and “Lips that touch wine would never touch mine.” On occasion, my father would find an empty beer can in the yard on Sunday morning (not mine, I assure you!). He would carefully bury it at the bottom of the trash can, lest the sanitation workers think he had strayed.
As for myself, I can’t stand beer. Two and a half cans consumed when I was 16 were enough to do in my taste for the barley brew. These days, an occasional glass of wine at dinner is enough for me. In fact, up until a couple years ago, I carefully tucked away all the bottles when my parents came to visit.
So, how did the Raise Your Pints crew get the legislators to go on the record for this controversial new law?  Was it by promoting this as an economic issue — more breweries, more tourists, more hipsters drinking the crafty stuff? Was it by pointing out that the higher alcohol content beers cost more, so the college students wouldn’t be in the market for them? Or did they simply send over a few cases and let nature take its course?
First casinos, now beer. What is this state coming to? Next thing you know, there’ll be a winery in the Delta. Oh, wait, there already is!
Well, if you can’t lick ‘em … Cheers!

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158.  She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.