Good afternoon, Viewfinders. It's time for more fun with links. Here's some of what I've been reading today.
Taxpayers on hook for loans to offshore medical students
Why is the U.S. Department of Education issuing loans for students at Caribbean medical schools that aren't accredited in the U.S.? Doesn't seem to make sense, does it? Janet Lorin of Bloomberg News does a deep dive into DeVry, the for-profit education company, where students are taking on hundreds of thousands of dollars of debt to pursue medical degrees after being rejected by U.S. medical schools. Some face bleak career prospects as physicians when they return stateside.
The more money Glencore blows, the more it saves
Hey there, GlencoreXstrata investors. The company wants you to forget about its deal-making losses and focus on its deal-making savings instead. The Swiss metals producer and commodity trader raised its 2014 estimates of "synergies" from Glencore's acquisition of Xstrata to $2 billion, about four times the initial forecast. Glencore paid $29 billion for Xstrata in May and three months later wrote down the assets by $7.7 billion, which showed it overpaid by a lot. But, again, pay no attention to the writedowns, because that's all in the past. OK? Anyway, the stock was up today.
Are we safe? Not safe enough? Safer?
All this Lehman-anniversary debating about whether the financial system is safer than five years ago reminds me of that scene from the movie "Marathon Man" with Dustin Hoffman in the dentist's chair. Is it safe? Martin Neil Baily and Douglas Elliott of the Brookings Institution say "we're much safer" in a piece for Real Clear Markets. Not sure how they or anyone else can really know, but there you have it. "The most important single improvement is probably the dramatic increase in bank capital," they write.
Just how ridiculous is the Dow Jones Industrial Average?
Goldman Sachs, Nike and Visa are in. Alcoa, Bank of America and Hewlett-Packard are out. What does it mean? Not much. The index is price-weighted, has only 30 stocks and the selections are arbitrary. Neil Irwin of the Washington Post writes that the Dow rejiggering "only shows the utter uselessness of the Dow Jones Industrial Average for measuring anything." And he's right. Americans follow it anyway, idiosyncrasies and all, because we're suckers for old habits and tradition.
Can audit reports be fixed?
The Public Company Accounting Oversight Board has a proposal to make audit firms' reports useful to investors, which would be a change because they're pretty much worthless and have been that way for decades. Francine McKenna, who writes about accounting firms at her blog, re: The Auditors, takes a critical look at what the board is floating. "Don’t get too excited," she writes. "The same sticky issues come up every time, get tossed around and then get dropped until the next scandal or crisis provides an impetus for a discussion again."
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)