Debtors Can’t Be Hoarders

To some people, great art is more important than anything, including food and shelter.

For most of us, though, no matter how moving we find a piece of artwork, the choice between parting with it and meeting our basic needs would really be no choice at all.

The conflict between preserving culture and survival has recently played out on a national scale. Portugal, a country that remains desperately short of cash, partnered with Christie’s to prepare 85 pieces of art by Spanish surrealist Joan Miro for auction this month. However, in part due to the efforts of Portugal’s Socialist Party to challenge the sale, Christie’s withdrew the art just hours before the planned London auction. Even though the High Court in Lisbon dismissed the challenge, the auction house still cited concerns about legal complications that could affect future ownership rights.

The incident has been an embarrassment for Portugal and also leaves the government in a bind. Jorge Barreto Xavier, Portugal’s secretary of state for culture, said the government would have to consider next steps. “If we want to hold onto these works, we will have to find money for them somewhere,” he said, possibly in the form of additional cuts to the already slim budgets for education or health. (1)

The Banco Portugues de Negocios, the bank that formerly owned the artwork, was nationalized in 2008. The bank purchased the Miro collection from a Japanese investor in 2006; the collection was never displayed in Portugal. Though The Wall Street Journal reported that it is not yet certain whether the works will be auctioned by Christie’s in May or if they are destined for another fate, Portuguese opponents of the sale have lauded Christie’s decision as a cultural triumph anyway.

Pedro Lapa, the art director of Lisbon’s Berardo Museum, said “The Portuguese people should have the right to keep and enjoy what is now theirs.” (2)

His sentiment is understandable but deeply misguided. Portugal still relies on other members of the European Union, and other international sources, for support. But somehow it has become vital that this collection of artwork remain in the hands of the government, which never set out to acquire it in the first place.

If it is truly of great importance to the people of Portugal to retain this art, and if they would rather pay higher taxes, forego even more services or sell some other government property instead in order to keep it, that decision is their business. I don’t object. But it seems crazy to imagine that most of the people who have suffered through five years of crushing austerity will say their government’s top priority should be to collect artwork on their behalf.

The channel of art from private collection to collapsing bank to government to auction, in all its variations, is nothing new. The Bank of Ireland was among several Irish banks to sell their art collections during the height of that country’s recent austerity. Seized artwork from a collapsed South Korean bank went to auction in 2012. But the gap between critics’ reaction and financial reality is most closed mirrored by a situation here in the United States.

As part of its bankruptcy proceedings, Detroit hired Christie’s to appraise the value of the portion of the Detroit Institute of Arts’ collection owned by the city. The auction house valued the 1,741 works of art in question between $421.5 million and $805 million. Some of the city’s creditors claimed this was a low-ball estimate. Either way, it is dwarfed by Detroit’s $18 billion debt.

Detroit is literally broke, making its situation even more outrageous than that of Portugal. The city barely functions. A lot of people to whom Detroit owes money are not going to get paid in full, or anywhere close. It is the duty of the bankruptcy court to get creditors paid as much as reasonably possible while allowing the debtor to clear the slate and go on with life.

Art lovers who have visions of Detroit someday becoming a world-class city again are loath to part with the city’s collection. But when the streetlights don’t work, ambulances don’t come and pensioners don’t get paid, it is at best a case of grossly warped priorities to insist on holding the art.

If some wealthy philanthropist – or a group of them – wanted to buy the art at fair market value and arrange to lend it to the DIA indefinitely, or establish or endow an independent museum in Detroit to house the art, that would be a great answer. There would be nothing more to talk about.

For now, a group of private foundations has stepped forward to try to preserve the art. Instead of purchasing it from the city, however, the group would pledge its funds toward Detroit’s pension obligations directly in exchange for the city leaving the art alone. So far, the foundations have pledged $370 million – not enough to meet even low end of Christie’s estimate. Officials at the museum have pledged to raise an additional $100 million, and Gov. Rick Snyder has asked the state Legislature to provide $350 million to reduce possible pension cuts and, at the same time, leave the museum’s art collection whole.

Art is important, but it is hard to argue that it is more important than reducing Detroit’s 58-minute average 911 response time or meeting its pension obligations, believed to be underfunded by up to $3.5 billion. Any outcome that leaves Detroit’s artwork in the hands of a city that can’t afford to maintain it, much less do without its value, or that underpays the city for what the art is worth and thus underpays the city’s citizens and creditors, would be almost grotesquely unjust.

Being broke has consequences. One is that you have to liquidate some assets and carefully set your priorities. Debtors can’t afford to be hoarders.


1) The Washington Post, “Legal concerns foil Portugal’s art sale ambitions”

2) The Wall Street Journal, “Christie’s Pulls Auction of Joan Miró Art After Uproar”

What’s Forecast for 2014? 5 Predictions for the New Year

What’s Forecast for 2014? 5 Predictions for the New Year

1. The Gamification of Education – connecting like-minds to consolidate learning.

It’s a well known fact that gaming captures a teenager’s attention for hours whilst the traditional, listen-and-learn, lecture-theatre environment is failing to capture imagination with quite as much vigour as once did. 2014 will be the year when inspired educators seek to have fun with existing technology by way of making their material more captivating in its consumption. This will further open up the accessibility to advanced learning material. It will give Further Education Establishments a competitive challenge that will see them specialize with strong unique selling points or struggle to stay alive as information created by learners for learners, in practical, digestible terms – finds fun ways to reach its audience.

2. The Internet of Money – leaving behind the legacy of the recession – will it bite again?

#Bitcoin is gaining attention as financiers and entrepreneurs ask whether or not this currency is worth investing in. When I spoke with Andreas M. Antonopoulos, a leading #Bitcoin pioneer, his answer was clear. “Bitcoin is more than money for the internet, it’s the internet of money”. When you think about what the internet has done in terms of decentralizing communication, levelling the audience reach of a growing talent pool and increasing the accessibility of advanced learning materials as inclusively accessible – suddenly you can see how a currency with such a strategy as its raison d’être could implode the money markets as we currently know them to be.

The recession left us very slow at making decisions – whether we’re able to push past the cold-climate mindset the financial dip collectively caused remains a challenge for 2014. Analysts predict a potential market collapse as interest rates rise in May/June and we’re far from completely out of the dark days. The future is open to innovators and entrepreneurs willing and able to embrace the open doors such dramatic shifts in the sands of society – create.

3. Pinpoint Marketing and SOCIAL Engine Optimization – building on mobile, location, sensory and diverse data technologies to accurately target you at your most receptive.

Adverts dotting the sides of our screens and positioned as banners on pages are no surprise to us – quickly we’ve learnt to largely ignore them. Adverts disguised as cleverly positioned posts from our friends – entertaining, enlightening, captivating in their ingenious designs… infiltrating our social networks, pinpointing our needs with alarming accuracy and stimulating us into sharing them with our friends… 2014 will see the rise of directly targeted marketing. Created for social sharing, such advertising will blend with peer posts and leverage the trust you have in your network by way of enticing you into to a sale.
It’s scary. If you’re selling something you need to know how the power of such promotion works if you intend to retain your market share. Your search field will narrow as analytics get “better” at giving you what they think you want. Search Engine Optimization matters but SOCIAL Engine Optimization will matter more in 2014.

4. “Mean Green” (selfish shockers we thought we’d all out grown) – giving rise to an environmental agenda of growing economic interest as viable business models emerge.

A friend of mine’s 19 year old daughter asked for a real fur scarf for Christmas. I’ve been a vegetarian for 27 years – and an active feminist all my live – what I mean is I live to expect equality between men and women and give nature my full respect. We have had all of these debates endlessly; the environment, equality, poverty etc. – “Green” – as this colour has come to mean. I predict 2014 will sadly shed light on selfish acts we thought we’d outgrown with regards to disrespecting minority groups and disadvantaged individuals as well abusing nature and the environment. Such behaviour, seemingly unacceptable a few years ago will go relatively unreported and openly tolerated throughout the year.

This bad behaviour will be counteracted by Green communities, further incentivised by a noticeable decline in support for their cause. Suddenly the Green movement will gain momentum and accelerate in the right direction as re-innovated technologies become cost effective and viable business models emerge – particularly in respect of the supply of Green Energy.

5. Cross-cultural collaboration like we’ve never seen – driven by Millennial minds; people around the world, connected by a common cause, sharing and transferring know-how on a large scale.

The bottom-up revolution in the restructuring of society will gain momentum as the millennial generation empower ways of collaborating, creating together, sharing and transferring knowledge and skills in ways the baby boomers could never imagine. 2013 showed us how huge groups of people can quickly be pulled together through the power of social media – and how first hand facts, recorded and shared from the scene will spread faster than the information reported by mainstream media. Quite where this collective force will carry us throughout the year – remains to be seen.

There is a lot of positive energy surrounding 2014 and I am very excited about the prospects the year ahead has in store. Furthermore, I get the feeling that I’m not the only one caught up in such emotion.

We’re realizing more and more how much our state or mind, our mental well-being – how we feel, emotionally and intelligently – makes a massive difference to the quality of our health and wealth.

As you move into 2014 – my approach is to embrace the year whole-heartedly. Be aware of targeted advertising and the narrowing of your search field that will ensure. Work openly to broaden your interests.

Follow what excites you – make a point of meeting more like-minds, and be open to unexpected opportunities. It is with certainty AND surprise that TOGETHER we will thrive!

Have a great year!

To be included in the 7 part email series celebrating the start of 2014 – PLEASE CLICK HERE.

Can a Property Buyer Really Help You Financially?

The property market can always be a difficult area to follow. With the predicted increase of UK house prices by 7 per cent over 2014, many buyers are looking to invest. But what does this mean for home owners and sellers? As a home owner this means now is the best time to sell.

With more people desperate to buy, home owners and sellers can look to sell their properties for as much as 95% of asking price whereas on average sellers tend to sell for as little as 80% of asking price. This benefits any home owner you can gain more for your property than before. Home owners can also expect to achieve a quick house sale.

Although property prices have been increasing steadily over the recent months; studies show that the rate of property transactions have not increased at all. This means that despite the recent surge in property prices, the amount of sales has not increased which could prove worrying over the coming years. The fact is, mortgages are harder to gain and the government scheme ‘Help to buy’ has yet to be seen.

“House prices and the number of transactions remain well off their pre-crisis peak: we are not seeing an all-consuming bubble with prices running out of control and buyers snapping up anything at any price.” Said Nicholas Ayre, managing director of Home Fusion.

Many property experts are predicting a house price bubble. This means even if the prices are increasing now, there is a chance that property values will eventually decline and crash.

So how can a property buyer help you? A property buyer can help you in many ways, the first being landing you a large sum of money. With mortgage interest rates increasing, a property buyer can help to take away any mortgage payments you may currently have and save you from any debts. If you are looking to sell your house fast, there is no better time than now. Selling now will help you to avoid a housing bubble and help you gain maximum value for your property. With some buyers offering cash for property, there is no reason to wait. Selling now ensures a safer route out of any debts and mortgage payments giving you a comfortable future.

To summarise, rising house prices aren’t always a good thing. With recent problems in the British economy, many people are struggling; with wages at a standstill. Many people are stuck with low equity and are unable to progress. Increase in property prices in the short term may help, but with the fears of a possible house price bubble, it is advisable to not to take any risks. If a thought on your mind is “buy our house”, then look into a property buyer.

Jobs in the Film Industry

If you are looking for a career in the film industry, you are looking at a pretty competitive business. The good news is that many people are getting jobs in this area, even when the economy is suffering from a slump, because entertainment is the one thing people still spend money on during tough times. Here are a few statistics pertaining to careers in film.

In recent years, theater admissions did decline, but it seems that the year 2006 ended a three year downward trend because admissions increased three.3 percent over 2005. Revenues from ticket sales increased by 5.Close to 5 percent, making 2006 a $9.49 billion year. Movies released in 2006 were up 607, marking an 11 percent increase over the number of releases in 2005.

If you want to learn how to be a director or a producer the latest published data from the US Bureau of Labor Statistics indicates that the film industry provided 157,000 jobs for actors, directors and producers in 2004. This number is expected to grow between 9-17 percent by the year 2014.

In 2002, there were about 360,000 jobs in the motion picture and video industries, but most of these workers were involved in the production end of film making. There are many companies in the industry employ 10 workers or less. The good news is that a 31.1 percent increase in jobs is expected industry-wide between the years 2002 and 2012. This growth is about twice the 16 percent growth expected across all industries combined over the same timeframe.

How much money can you can make by getting a job in the film industry? It seems that median annual earnings for salaried producers and directors, were about $46,240 in 2002. And if you were really good, and lucky, the top ten percent earned over $119,760.

Those who are really serious about a career in the film business should take a look at programs with film mentor teachers from inside the industry, which takes you out of the classroom of some film schools in colleges and onto real movie sets. This is how and where you’ll learn by doing while you apprentice, one-on-one with a mentor, or by working with a professional – a producer, actor, or a director – in the area of film that you want to study. There are plenty of Los Angeles film schools, and even New York film schools, and many in between in just about any major city in the U.S., but the reality is that in order to really “break into the film business” you will benefit by studying with a working professional.

The reality is that no matter what the economy has in store, or what the job market statistics come in at — if you really want to work in the entertainment or film industry, the best way to do it is to learn your skills from a mentor in the entertainment industry who will help you get a job once you graduate.

The Future of US Accounting – Similarities and Differences Between GAAP and IFRS

The United Sates will begin the switch from Generally Accepted Accounting Principles(GAAP) to International Financial Reporting Standards(IFRS) in 2014. This transition will bring significant changes in the way accountants treat, record, report, and interpret financial and other relevant industry information within U.S. and foreign companies. It is therefore important, before we begin to learn accounting in practice according to IFRS, that we inform ourselves about the key similarities and differences between GAAP and IFRS. Thorough research of web articles concludes that both systems of accounting have numerous similarities but have significantly more differences. Once completed, convergence will break down the accounting standards translation barriers that domestic and foreign firms currently have among their accounting processes and lead to harmonization in the accounting world.

Today, the majority of United States’ businesses are involved in overseas markets and most foreign companies are already using IFRS. The Securities Exchange commission has recognized this and released a statement in support, in February of 2010, of the need for a universal, unified set of accounting standards to be followed, and that IFRS is the best suited set of standards to take on that role. The SEC also developed a road map to achieve this task of convergence and plans to make a final decision in 2011 regarding the definite incorporation of IFRS into the United States. The recent economic recession that affected the majority of the world is one such reason a global set of accounting standards is in need. Many worldwide capital markets were affected by the recession and this only strengthens the argument of the need for a unified set of accounting standards. The convergence of IFRS and GAAP will unify all companies in a common financial reporting language and will iron out any differences domestic and foreign firms encountered in the past. Before this convergence begins, it is important to have a discussion of a few of the major similarities and differences between IFRS and GAAP regarding the Financial Statements, Inventories, and Revenue Recognition so that we may begin to understand how greatly this convergence effort will affect us as U.S. GAAP users.

Before any interested party can begin to examine the internal workings of a company they usually begin in the same place, the financial statements. Financial statements are useful for a multitude of reasons to investors, creditors, directors, internal and external managers etc. and comparability of foreign and domestic financial statements is essential to the modern business. Fortunately, IFRS and GAAP already consider the same financial statements to be the accepted standard for reporting. Under both systems, the preferred statements are: the Income Statement, Balance Sheet, Other Comprehensive Income Statement which is called the Statement of Recognized Income and Expense under the IFRS system, the Statement of Cash Flows, and the Notes to the Financial Statements. Both frameworks require the accrual method of accounting be used with the exception for the Statement of Cash Flows. Both frameworks however, have their significant differences. GAAP allow comparative statements be issued or even a single year in some cases. The balance sheet must be presented with the two most recent years as a comparison and all other statements must cover a three-year period based upon the balance sheet date. Under IFRS, all reports must be released comparatively with the previous period. A standard layout of the balance sheet and the income statement is not necessary under GAAP however, public companies must follow specific rules. Under IFRS, there is no standard layout, just a list of minimum items that must be disclosed. Balance sheets under GAAP must present debt to be paid in more than one year as a long-term liability while IFRS requires all debt to be classified as current unless the agreement to pay the debt was made prior to the balance sheet date. Under GAAP, expenses are classified according to function. IFRS allows expenses to be classified according to function or nature of such expense. Extraordinary items must be unusual and infrequent in occurrence to be included in GAAP income statements whereas extraordinary items are prohibited under IFRS. This is certainly not an all-inclusive list of the differences between the financial statements under both of the frameworks. It is clear to see though, how even the slightest differences between a set of two financial statements, one IFRS and one GAAP, could lead a user of such statements into a troubling situation.

Most businesses in the U.S. and worldwide all have one aspect in common, inventories. Luckily, the basis for valuing inventory under IFRS and GAAP is cost. They both define inventory as assets held for sale in the ordinary course of business, in the process of production for such sale, or to be consumed in the production of goods or services. The cost of inventory is also supported by the money that was spent readying inventory for sale, such as freight-in. Likewise, the two standards have their differences when it comes to reporting inventories. Under GAAP, any cost method can be used for inventories whereas IFRS prohibits LIFO and requires the same costing method be applied to all inventory similar in nature. GAAP requires inventory be measured at the lower of cost or market value. IFRS states that inventory must be measured at the lower of cost or net realizable value. There are several more issues to deal with regarding inventories, in particular mark-down reversals of inventory under each system are different. There are currently no ongoing convergence efforts regarding inventory by the FASB and IASB.

The most important asset to a business, many say, is cash. Without cash the business will be in trouble when it comes time to pay off debts, make any capital expenditures, or simply get lines of credit. One of the ways of getting cash is from revenue into the business. Revenue is defined as the gross inflow of economic benefits during the period arising in the course of the ordinary activities of the entity when those inflows result in increases in equity except increases in equity from distributions from owners.

Under both sets of standards, revenue is not recognized until it is earned or realized(or realizable). When discussing the sale of goods, GAAP requires that there is a legal transfer of ownership and the goods have been delivered at a set price and the seller can reasonable expect payment. Under IFRS, revenue can only be recorded when the risks and rewards of ownership are transferred and the buyer has control of the goods. When recording service revenue, GAAP does not allow any up front revenue recognition if the services are to be performed over a period of time. Such revenue must be amortized. IFRS does allow the option to record the revenue all at once even if the services will be performed over a period of time. In regards as to when to recognize revenue for contingencies, U.S. GAAP requires companies to wait until the contingency is resolved before they record any revenue. IFRS does allow for contingent revenue to be recorded as long as certain mandatory requirements are met. This presents a problem because a company using IFRS could potentially record revenue earlier than it actually received the inflow of assets, misleading users of financial statements.

As one can see just by viewing the similarities and differences among these three categories, the task of convergence is going to be quite challenging. The two sets of standards both have their logic in some areas yet have their downfalls in others. Convergence will benefit the United States in the sense that our financial statements will be much more easily compared to foreign companies’. Though it may take some time and money to be completely unified in our financial reporting, the benefit to global accounting harmonization far outweighs the cost.