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Just like you never want to hear a doctor say "oops" in the operating room, you never want to see a going-concern statement
in a financial report about a company you own. Accountants throw these in when they've been over the books, talked to customers,
and checked the horoscopes and have concluded there is "substantial doubt" about a company's ability to remain in business.
In short, don't blame the accountants if the company files for bankruptcy protection.
You¿d reckon that a going-concern
statement would be enough to send investors running to the exits, but it's not. True, many large institutions automatically
bail when an existing company gets slapped with one of these, but many individuals (often wrongly) take a chance they know
more than the bean counters.
During the tech boom of the late 1990s, many companies actually went public even though they had been hit with going-concern statements. Many of those companies subsequently disappeared. Enough said.
Home / Markets
Tuesday, May 20, 2008
Analysis
Upside to $4 a Gallon Gas...Really
Dunstan Prial
FOXBusiness
Believe it or not, there exists a contrarian view that says $4 for a gallon of gasoline is not such a bad thing.
This view is held by people who argue they are taking the long-view toward the improved economic, environmental and social health of the U.S.
Some of these folks believe $4 a gallon is in fact a good thing, a healthy thing. Five dollars might be even better, they say. And $6 a gallon would be best of all.
“We have a crisis on our hands and every industry is going to have to adjust,” said Randy Chastain, a real estate developer in the Nashville area. “But this isn’t a negative story. We’re being forced to grow up and we’re smart enough here in America to make the adjustment.”
Chastain, president of Parkside Homes, a builder that specializes in energy-efficient homes, readily acknowledges that he’s a ‘glass half-full’ kind of guy. He sees rising fuel costs as an opportunity for the U.S. to begin reinventing itself as a leaner more efficient country.
Let him explain his reasoning:
Cheap energy is a root cause for many of the social ills tearing at the fabric of American society.
Ugly and disjointed suburban sprawl, decaying inner cities, long commutes in gas guzzling SUVs, huge energy-burning homes -- the origins of these problems can be traced directly to the low cost of energy in post World War II America, Chastain argues.
Cheap gas allowed people to move further and further away from where they work, requiring them to make longer and longer commutes. And cheap heating fuel--natural gas and electricity--allowed these same people to build gigantic homes that waste at least as much energy as is used to keep those homes warm and well lit.
“The days of cheap fuel are over with and now we have to change the way we live. Biggie-sizing everything--those days are over,” said Chastain.
He’s predicting a return to an era in which people live 15 minutes or less from their office. And those homes will be much smaller, and far more fuel-efficient than the models favored in recent decades.
Indeed, he’s ready to break ground on two developments of smaller, fuel-efficient homes, one near downtown Nashville and another near Huntsville, Ala.
Shorter commutes mean more time with family, and less wasted energy means a healthier environment. All of this a direct--and positive -- consequence of the rising cost of fuel, according to Chastain.
He’s not alone in this long view.
“High energy prices make alternative forms of energy cost effective,” said Axel Merk, manager of the $400 million Merk Hard Currency Fund. “It will encourage investment in alternative fuels and energy efficiency, all of which will be a long-term positive.”
Still, Merk tempered his perspective by noting the hardship high fuel costs will cause low-income Americans. “Inflation is a highly regressive tax,” he said, “the poor man suffers most.”
There is also a school of economists that have been calling for a higher gas tax for years, citing such benefits as reduced congestion on the roads, a shift to more fuel efficient cars, more money for improvements to roads and other infrastructure, and less dependence on foreign oil.
The last point has been tied to national security in that a U.S. less dependent on Mideast oil is a U.S. less involved in the political affairs of that volatile region.
But despite the hypothetical benefits, an increase in the gas tax is probably politically unviable.
“Even after a $1 hike, the U.S. gas tax would still be less than half the level in say, Great Britain, which last time I checked is still a democracy. But don’t expect those vying for office to come around until the American people recognize that while higher gas taxes are unattractive, the alternatives are even worse,” wrote Harvard economist Greg Mankiw in a 2006 blog post.
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