A Bittersweet Goodbye from the FBEI

As graduation arrives in a mere 3 days, I have spoken to many undergraduate and MBA students who are experiencing a strange mixture of joy at their accomplishments but also anxiety, concern and fear. Certainly, they enter into this next chapter of their lives in a challenging business, economic, and political era, but the source of this anxiety is something much more personal and touching.

Many conversations with graduating students have focused on the great relationship built up over these past years in school, either at our lovely ocean front campus or at Mission Valley. The rhythm and routine of the certainty created by an academic schedule is now being replaced, and often with something far less certain. For some, it means a move away and the knowledge that we will see each other again only if circumstances allow.

The first year I sat as a faculty member in graduation, I was profoundly moved by watching the festivities around me but even more so by the embraces, photos, and introductions to families and friends who were there to celebrate a great accomplishment. Those are great memories and for those whom I stay in contact with, across many industries and parts of the world, these relationships have grown even deeper. Ultimately, graduation proves to be a very bittersweet experience for us all.

So to all of our pending graduates I say to each of you ‘well done!’ Finish strong in these final days and know that many of us are praying, supporting, and hoping the best for you both now and in the future.

Sincerely,
Randy Ataide
Executive Director

Cathy Gallagher – Director
Commencement truly is a bittersweet moment for us as we have been blessed to get to know many of you in different settings and on varying levels. We are so excited at what the future has in store for each of you, yet saddened by the thought that life may somehow get in the way of continuing the relationship we have worked so hard to build. Please know nothing give us greater joy at the FBEI then when we reconnect with our alums, whether it be a week, month, or year after they graduate. We want to maintain contact with you, have coffee, lunch, take a moment to catch up on what is going in your life, and celebrate accomplishments with you. We want you coming back to give a bit of yourself, share your experiences with those who are following behind you, and provide connections within your own network, or tap back into our network. So as you go on your way, wherever life is taking you beyond PLNU, take a moment to look over your shoulder now and again and say hello to those who remember you, brag about you, pray for you, and wish you well.

Lynn Reaser – PLNU Chief Economist
You are entering a world that holds both unprecedented opportunities and challenges.  Stay true to your values and you will never go astray.  Strive for excellence and work for a better world.  We are extremely proud of you.  Stay in touch and know that we will be here for you.

Dieter Mauerman – Economic Research Assistant
We are proud of each of you. In your future careers make the most of each opportunity you are presented with.  Don’t be afraid to go against the norm and be yourself.  Relationships made in school are often times the most rewarding, so come visit us and don’t forget to stay in touch.

Emily Gallentine – Manager
Over the past year as Manager of the FBEI, I have gotten the sincere pleasure of walking with many of you through opportunities, successes, trials, stresses, fears, and professional growth. At the FBEI, we get the distinct joy of completely understanding what our business partners mean when they say to us, “There’s just something about those PLNU students.” “That something” they are speaking of will take you far in life. We are proud of you and are honored to know you. Although this time is bittersweet for us all, we continue to be your biggest fans and will be here to support you today and in the future. Best of luck and congratulations PLNU Class of 2012!

Why I Teach?…Professor Randy Ataide unpacks his journey and shares his joys of teaching

In late 2004, Dr. Bruce Schooling, then Dean of the Fermanian School of Business, asked me if I would consider teaching the second half of a management course for MBA’s. At the time, I was the CEO of my own agricultural company near Fresno and while the thought of teaching was appealing, I had serious questions regarding my capacity to be able to succeed at teaching, let alone the 640 mile weekly round trip from my home. Preparing a syllabus and laying the theoretical foundation for a class was completely new to me, as were all of the many other things needed to teach. At a deeper level, I wondered if I could translate my own experiences in business and entrepreneurship to the classroom level.

The course turned out to be exhilarating (at least for me!), and even the long solo drive provided a respite from the burdens of the company and its many functions, initiatives, and burdens. At the completion of the course, I had built some excellent relationships with students which inspired me to seriously consider the possibility of joining PLNU full time, leading to a decision within the next year to move to San Diego. Since then, I have been busy with many tasks and responsibilities, but I have also taught a significant number of courses at both the MBA and undergraduate level.

This past Wednesday, I arrived at my office at PLNU and the flashing red light of my office telephone was informing me of a voicemail. Entering my code, the steely mechanical tone of the automated system was replaced by an exuberant voice of an MBA that I quickly recognized. She proceeded to report in enthusiastic terms how she had taken the principles learned from our Negotiation Strategy and Value Creation MBA course, and applied them into an employment setting. She explained that these skills had enabled her to successfully negotiate a new position that met or exceeded her personal and professional goals and expectations. In a most gracious and affirming way, she thanked me for the knowledge learned.

I recall coaching Little League many years ago when our son was young, and my initial year our team, despite our best efforts, went 0 and 16. Every time we were near a win, the opposing team, not wanting to be the first to lose to us, would quickly shuffle their lineup late in the game and bring in their ‘Ace’ to overpower our young hitters. With two close friends as fellow coaches, we worked hard to keep our boys encouraged and build skills throughout that long season. Morale remained high and the following season we won many games and finished second overall in the league tournament. The memories of those boys and coaches and the mutual encouragement we provided each other stay with me to this day.

There are days when I wonder why I teach, for I may be very busy or tired or stressed out (or some combination of all of these.) I question my effectiveness and after the class is completed I have doubts if I have been able to provide to the students information, knowledge, and skills that are of use to them, both now and in the future. Like my Little League team, I know that we often do not see an instant uptake, but with time the opportunity for a positive result increases. The unexpected phone message this week, just like the regular cups of coffee and conversations I have with a number of alums, or the visit I had last week in L.A. with a couple of young entrepreneurs from my class in 2006, are all examples of what provide me the continued energy to stay in the classroom. At the end of the day, they are all reminders to me of why I teach.

The Secret to Success: Silencing the Snooze

By Randy Ataide

Often when I travel, I find myself in an airport bookstore wandering the aisles. While I am an avid user of eBooks and other technological innovations, I do enjoy seeing what is currently being published and pushed to the mass markets. The blaring headline of “Ten Quick Steps to Success” or “Become a Real Estate Millionaire with Nothing Down!” usually upset my stomach, as little more than thinly veiled scams. Ugghhh!

Students, alumni and others in business frequently ask me about personal and professional success, and while this is not a topic that I have done any amount of research on, I do believe that there are certain things that any person can do which usually has very positive results. In fact, I can say that among most successful people I know, they often share one thing in common more than anything else. It is not the status of your university, a  specific field of study, grade point average, gender, socio-economic background, geographical location, career path or any of the “usual suspects.” It is something much simpler and much more accessible and attainable by anyone.

We have all heard the famous quotation of Benjamin Franklin “Early to bed, early to rise, makes a man healthy, wealthy and wise.” Perhaps our parents or grandparents recited this short proverb to us, and anyone who was raised in a farm community knows that this is near gospel to those populations. But the philosophical foundations of this traditional wisdom run much deeper, for Aristotle wrote “It is well to be up before daybreak, for such habits contribute to health, wealth, and wisdom.” In many religions the spiritual value of the early morning is at least one area in which we find much agreement. This time has been called “the heroic minute” and it is likely that Jesus often went early to find solitude to pray, think and meditate.

My students and peers at least appear to be surprised when I tell them I was a slothful and unmotivated youth, a poor student and with little life direction. At the age of seventeen, my own body clock altered, and four years in the military only reinforced this discipline. For nearly forty years, I have been a notorious early riser (you should read some of the comments I receive from people who notice the time stamps of some of my early morning emails!) I find this to be a superb time of reading, writing, thinking, praying and looking ahead to my day. The great value in having several hours of absolutely uninterrupted time cannot be overstated. Ben Franklin offered another bit of wisdom of well: “The early morning has gold in its mouth.” My own experience is that while this may not be literally true, the early morning does give one a great competitive advantage, a head start to the day in productivity which most others cannot catch up to through the rest of the day.

Recently, I have met with several young professionals, each in very different fields and all in the mid to later twenties. Without any prompting, all told me that they are rising earlier and found much of what I wrote above to be true. I have great confidence in each of them achieving their own level of success. My advice to you? Save your money on the slick airport books, lectures or other systems of success. Simply set the alarm clock, brew some coffee, and start your day!

The Other Gold Rush

By: Randy M. Ataide

Much has been made of the huge rise in commodity prices in the past few years, with prices of gold, silver and other precious metals dominating the business headlines, and many people cashing in through the proliferation of “We Buy Gold!” shops seemingly sprouting overnight throughout the country. But there has been another “gold rush” occurring in our midst, one that is just starting to get the attention of people outside of the industry.

According to a recent report by the Federal Reserve Bank of Kansas City, U.S. Midwest farmland rose over 25% in value, and some states exceeded single year price increases of 40%. This was the highest price rise in farmland in the U.S. in the survey history, and some reports pegged individual sales of Midwest farms at $20,000 per acre. For California’s own massive farm region of the San Joaquin Valley, booming exports of almonds, walnuts and other commodities has driven this land significantly higher as well, while at the same time, regulatory and water limitations have only served to make existing land and farms even more valuable. In the past ten years, California coastal lands in Santa Barbara, Santa Maria, Paso Robles and other areas have seen explosive price growth as a major wine industry has emerged, turning former idyllic ranch and grazing lands long overlooked by most into the “new Napa.” (There are now well over 200 operating wineries in the Paso Robles/Templeton/San Luis Obispo region.)

For those of us in the coastal regions, such prices would hardly catch our eye, and seem like a bargain. Imagine your own twenty acre spread in San Diego for a mere $200,000? (Can anyone say ‘Green Acres?) But for those in agricultural production (farmers), lending (bankers), services and supplies (tractor and track sales), etc., this is an alarming state of events. In any region, the escalation of farmland prices is always a very mixed blessing for the local farmer, for while it does indeed give them a bump in their “paper wealth” it typically makes it more difficult to obtain financing and operating loans and can distort the long term view of farming through enhanced competition from speculators and outside investors. How does an agricultural banker provide long term stable funding to farmers when speculators push the price upwards for the underlying asset being collateralized?

Over the past month or so, I have seen several investor newsletters that counsel their clients to consider purchasing farmland as an alternative investment, providing a tangible asset for the savvy investor in turbulent times in the global markets. As an opposing view, I would counsel caution for such investments. There are so many variables in the proper valuation of farmland, with the essential need for local knowledge often missing as to a particular parcel’s actual viability and suitability for production in these investor solicitations. In any particular area, even adjoining parcels can have very different values for reasons only accessible to a careful and experienced eye.

In my own business and investment experience, I think that farming is best left to farmers. If the bug hits you in 2012 to acquire some real estate, I would look first to opportunities closer to home, perhaps an undervalued and distressed residential or commercial property where information, knowledge and variables are better understood.

Q: Are San Diego consumers in a better buying mood this coming holiday season than they were in 2010?

By: Dr. Lynn Reaser

Q: Are San Diego consumers in a better buying mood this coming holiday season than they were in 2010?

 

                                                                                                                                                                A:  No.  While San Diego County has added 15,000 jobs so far this year, triple the gain for all of 2010, the jobless rate is still close to 10%.  Wages have not kept pace with prices as food and energy costs have jumped.  Home prices are somewhat lower than a year ago.  Stock prices remain volatile and have struggled to even match last year’s closing values.  Meanwhile, a major cloud of uncertainty looms regarding both the European debt situation and our own budget problems.  San Diego consumers will still spend for the holiday season but they will remain cautious as in 2010.

The Occupy Wall Street Movement—Helpful or Harmful?

By: Dr. Lynn Reaser

While the Occupy Wall Street Movement’s criticism of the fraud, financial abuses, and government “bailouts” of Wall Street are warranted, it is important not to extend the attack to business in general.

Entrepreneurs, such as Steve Jobs, who started out on a shoestring before climbing to the top one percent, have certainly benefited millions of Americans in terms of jobs, consumer products, or even increases in their 401(k) plans.  The last decade has been trying for all of us, but the median family income of Americans last year was still 8% in real terms above its level of 1985 and 14% above its level of 1975.

To regain our trend of rising living standards, the individuals and firms who create jobs and income for their employees need to be supported not chastised.

Q&A with Dr. Lynn Reaser

By: Dr. Lynn Reaser

Q: Is President Obama’s proposal to raise taxes on millionaires and billionaires good public policy?

A:  No.  Millionaires and billionaires should not pay lower tax rates than others, but they generally do not. They now pay an average of about 25% of their income in taxes versus about 7% for households earning $40,000 to $50,000.  Even increasing their average tax rate to 35% would generate at most about $72 billion, which would make only a modest dent in a deficit running $1.3 trillion…  Many wealthier households do benefit from larger share of their incomes in dividends and capital gains taxed at the 15% rate.  However, that income is currently “double taxed” as corporations pay a 35% on profits before it is distributed to shareholders.  Good public policy calls for total tax reform.

Q & A with Dr. Lynn Reaser

By: Dr. Lynn Reaser

Q: Is the $90 billion devoted to infrastructure in President Obama’s $447 billion jobs bill a good approach to boosting construction employment, and if so, what should the San Diego region spend its share on?

No.  While infrastructure investment may have merit in boosting our economic potential, this program will probably have only a limited impact on construction jobs.  First, the proposed $90 billion represents just 11% of last year’s depressed building expenditure total.  Second, these projects often require considerable time to secure all of the required approvals and permits.  They then often ramp up gradually as the design and engineering phases precede actual construction.  San Diego might most effectively deploy its share of federal funds in updating and repairing its basic infrastructure that may have been deferred because of budget cuts, including local roads, bridges, railways, water systems, and schools.

Q&A with Dr. Lynn Reaser

By: Dr. Lynn Reaser

Q:  Is the euro going to survive as a viable currency given the weakness of the European Union’s economy?

A: Yes.  European policymakers have a great deal of political and economic capital invested in the euro and will take every step possible to ensure its survival.  The common currency has reduced transactions costs in Europe and improved economic efficiency.  Northern Eurozone countries, including Finland, Germany, Austria, Belgium, and the Netherlands, have strong economic fundamentals.  Even with current grave concerns about Europe, the euro has recently equaled around $1.44 versus an average of $.90 in 2001.  If solutions to European’s debt problems among its southern members cannot be resolved, weaker nations, such as Greece, might leave (either temporarily or permanently), but the euro should survive.

Europe’s Debt Problems Crash on U.S. Shores

By: Dr. Lynn Reaser

The Federal Reserve is now worried that U.S. exposure to European banks is mounting while it is scrambling to find a way to protect the U.S. financial system from further chaos.  Stocks have plummeted.  Could it be as big a potential disaster as some are saying?

Fears are spreading that loans from European nations, the European Central Bank, and the International Monetary Fund will not be enough to solve the debt problems of debt-laden countries ranging from Greece to Italy.

As a result, these countries might be forced to ultimately default or restructure significant portions of their debt.  Reductions in principals paid, lower interest rates, or an extension of maturities will all impose losses on creditors.

Bank creditors holding European sovereign debt are consequently at risk of seeing their capital eroded and their financial positions substantially weakened.  A potential tightening of lending conditions, stock market losses, and fiscal austerity programs all threaten to start a negative feedback loop for the European economy with negative repercussions on the U.S.

The Federal Reserve is particularly concerned at this point that the U.S. arms of European banks might find funding from their parents in jeopardy.  Access to funds could be further strained by the selling of European exposure by U.S. money market funds, a shutoff in funding from U.S. commercial banks, and the withdrawal of deposits by U.S. customers.

U.S. Banks are in better position than in 2008, but European banks are in a worse predicament. Lack of transparency plagues European banks. Investors do not know how severe the damage could be.

Globally, entanglement and contagion risk does not appear to be as severe as existed after the subprime crisis, but no one can be sure of the web of exposure and possible losses that might be incurred across the financial system.

The Fed is certainly prepared to keep its discount window open to borrowers and to provide swap lines or dollars that may be needed by the European Central Bank. However, investors are looking for a bigger safety net to be provided by the Europeans or more convincing long-term solutions to Europe’s debt problems. Stay tuned.