Tuesday, February 15, 2011

Detroit Public Schools (DPS)

It's amazing how slow government organizations work.

January 1st I posted about assisting a financial analyst from the Detroit Federation of Teachers (DFT) on a report on how to solve the bankrupt Detroit Public Schools (DPS) financial problems.

The financial analyst was excited about the ideas we came up with. He presented the report to the union president who embraced many of the ideas. On January 7th the DFT presented the report to Robert Bobb, the state trustee placed in charge of the DPS. While he liked many of the ideas, Mr. Bobb was determined to stick with his original plan of having the state pay off the DPS debt. This man is paid six figures a year and his big plan is to have the state pay off the debt; an idea that has been rejected more than once. Unfortunately this type of waste is typical of the DPS. The financial analyst informed me:
At one point, several years ago, the District was using at least eight different law firms as well as maintaining their own legal department. It has been a District tradition to spend millions of dollars yearly on outside consultants and attorneys.

During the last three rounds of contract talks, the District utilized numerous attorneys and consultants. The last round of talks that ended in 2009 had more consultants than ever. They put together fancy presentations and were paid hundreds of thousands of dollars even though, in the end, nearly all of the $60 to $70 million in savings to the District came from ideas generated by the DFT at no cost to the District. This past summer, the District paid several million dollars to two consulting companies that made a complete shambles of the hiring and assigning of new teachers and the revamping of the special education program.
January 18, the plan was presented to the president of AFT-MI (the state teachers union).  The plan was well received, but the AFT thought they should continue to try to get Mr. Bobb on board.

The plan was to be presented to the DFT membership at their monthly meeting on January 20.  However,

The meeting never officially started.  The newly elected officers were sworn in to the sound of shouts and boos. Then chaos ruled for the next two hours as Steve Conn and his followers denounced the results of the recount and demanded that either all of the ballots be recounted again by hand, or that there be a new election.  The situation could have gotten even more ugly than it did, but there were three police officers in the back of the auditorium.  Still, it was quite disheartening to realize how thug-like some of our Detroit teachers could act.  Some of those folks are really scary.
The plan was finally presented to the DFT membership February 11.  The financial analyst told me that in spite of the first hour of the meeting consisting of people insulting and shouting at each other, there was complete silence when he got up to address the financial problems.  He stated our plan was well received and actually received a round of applause.






Next week (almost two months later), the DFT finally plans on presenting our plan to the governor.

Saturday, February 5, 2011

2011 Predictions


Carrie
Dave
Dan
Ken
Eric
Rich












Gold 1,420
1,710
1,470
1,700
1,500
1,500
Silver 32
42
38
25
32

DJIA 12,000
12,400
12,650
9,000
11,500
9,500
S&P

1,420
1,330
950


1,150
Nasdaq

2,900
2,900
1,500
2,650

Oil - Brent Crude
130
122
110
80

Bank Failures 187
98
142
140


200
CPI inflation

7
6
9



Unemployment  7
9
9
7



                            


Alltime High
12/31/10




Gold 1,442.60
1,420.85
Silver 49.45
30.91
DJIA 14,279.96
11,577.51
S&P 1,576.09
1,257.64
Nasdaq 5,132.52
2,652.87
Oil - Brent Crude 147.27
93.31


CARRIE
                           
"This year I will beat everyone, and even DW will have to admit that he was beaten by a girl... and not only that, but a Justin Bieber fan!"
                           
Dow - low 10000 // high 14500 //  end 12,000
Gold - falls in first quarter to 1265 // summer 1475 // end 1420
Silver - 32
Bank failures - 187   
Unemployment (government-reported value) - 7%           
Housing - falls to new lows
Detroit schools - they fail to take DW's suggestions and they suffer the consequences   
DAAG solves the problem of property rights and becomes world-famous. Carrie abhors being a celebrity and uses her new-found riches to buy a secluded forest in mid-Michigan.

                                                           
DAN
                           
Gold           1470       
Silver            38   
Dow          12650   
S&P            1330       
Nasdaq        2900       
Oil               122           
Bank Failures  142       
Inflation (CPI)   6%
Unemployment  9.2%       
DAAG Becomes a temporary political party. Wins every election; then disbands the government... The result? Everyone is SUPER happy and wants to live in the former USA. They end up calling it Real Utopia of America.


DAVE
                           
Dow: high 13,500  low 10000s           
S&P: high 1450   low in 1000s           
Gold will correct to around $1200 during the year
Japanese stocks will do well this decade
Natural gas will do well in 2011
Interest rates will increase.  US Treasurys will drop.
Detroit will declare bankruptcy   
Housing will offer good buys
Euro tanks   


ERIC
                           
Gold $1500, Silver $32, Oil $80  Euro at 1.10
Dow 11500 and Nasdaq 2650
I expect a general asset correction in next month or two in gold but especially industrial commodities.  China slow down keeps oil low.
US equity markets fall in 2011 but still out perform on a relative basis most other countries with possible exception of Japan.


KEN
                           
Bank closings: 140
Gold: $1700/toz
Silver: $25/toz
Oil: $110, but will reach $135 during the year.
U-3 unemployment: 7%
U-6: 17%
                           
IF: CPI-U (includes all items) stays < 5%
DOW: 13,000
SP500: 1400
NASDAQ: 3000
                           
CPI-U will reach 9% this year.  The Fed will stop pumping.
                           
DOW: 9,000
SP500: 950
NASDAQ: 1500


RICHARD
                           
Dow     9500
Russel   650
S&P     1150
Gold     1500
Bank Failures   200
Stagflation


1/3/11 Jim Cramer "I predict Alcoa will be the best performer in the S&P 500 in 2011."
I'd like to add to my predictions that Alcoa's stock (N:AA) will not have a good year.