Brexit Update: Deal or No Deal? (w/ Nigel Farage & Larry McDonald)


LARRY MCDONALD: Nigel Farage, it’s a pleasure
to have you back here with Real Vision. NIGEL FARAGE: Good to be back. Exciting times. LARRY MCDONALD: What you’ve accomplished this
year– and we sat down in the spring– blow by blow, you’ve called this thing pretty accurately. I was at an event where you did a speech in
the US. I notice you’ve been working with some of
the financial institutions you do, great speaker. As a public speaker, I remember this year,
and even back to last year, you were talking about Theresa May not making it through the
May Plan. NIGEL FARAGE: Well, I think I helped to get
rid of it, actually. LARRY MCDONALD: Wasn’t a loaded gun, I hope
not, but God bless her. She had incredible spirit, and she was inspiring
to most of us around the world, just watching what she went through. But at the end of the day– NIGEL FARAGE:
Well, you say that– look, what is Brexit? What is Brexit? LARRY MCDONALD: What is Brexit? NIGEL FARAGE: What do people want from Brexit? Now, I’m the godfather of this, so I think
I’ve got a reasonable idea. The point about Brexit is to break free. It’s about political independence. It’s about being a self-governing nation,
where your laws are made by your own representatives in Parliament and where the highest court
in the land, at times, is called into a judge. And what we’ve seen now, 3 and 1/4 years since
the Brexit vote, is an attempt by the political class to redefine Brexit as, somehow, Brexit
is staying part of the customs union, or staying part of the single market. And it is not. And here’s Mrs. May’s problem– I think she
went into this as a remainer, but as a Democrat. LARRY MCDONALD: I see. NIGEL FARAGE: Saying right, I’m going to do
the best job I can. She gave a big speech at Lancaster House,
where she said all the right things. LARRY MCDONALD: For the audience, that was
about– NIGEL FARAGE: Lancaster House was in early ’17. LARRY MCDONALD: Early ’17. NIGEL FARAGE: She gave a big speech, and I
thought, gosh, here’s a British prime minister saying things using words and phrases for
which I’ve been condemned consistently for the last 20 years. And this is now mainstream. And then, within a few months, I think the
Civil Service had got hold of it. And suddenly, rather than Brexit being a clean
break, it became a close and special partnership. And really, ever since that time, Brexit’s
been confused, and there is an attempt to redefine those that want a clean break as
somehow being the extremists. Public opinion does not suggest that. So I think Mrs. May started off with good
intentions. She then went wrong. And the longer this has gone on, the more
empowered the Liberal Democrats have felt in Britain– even the Labor Party, which have
gone from promising to deliver Brexit, now wanting to have a second referendum. So the longer that time has gone on, the more
that Parliament, the more that London has tried, effectively, to begin by watering it
down. And now, it’s an outright blatant attempt
by Parliament to stop it from happening. That’s where we are. LARRY MCDONALD: To undo the will of the people,
essentially. NIGEL FARAGE: Yeah. And they say things like, people didn’t know
what they were voting for, as if we’re all knuckle-dragging skinheads, and they somehow
know better. It’s a sense of moral superiority that many
of the remainers have. They say that we know more now than we did
then. And I think they really do think that, somehow,
we’ve changed our minds. Actually, the real hard evidence is about
this– remain right now is about 35%, leaving with a clean break Brexit– which is just
goodbye– you can whistle dixie for your $39 billion– we’ve just had enough of all of
this– let alone be insulted by the Luxembourg prime minister– I’ll come back to that–
is about 35%. And there are 17%– between 15% and 20% who
think, yeah, we must leave, but keeping a reasonable form of economic relationship might
be the easiest way. So if you look at it, leave significantly
has a lead over remain– far bigger than it did 3 and 1/2 years ago. And if you then give people a binary choice,
up against the wall– October 31, in a couple of weeks’ time, is it leave with no deal,
as they phrase it, or is it extend and have a second referendum? Then leave’s got a big majority. So we’re in this very, very strange world
where, in many ways, public opinion towards Brexit has hardened. More people than ever want it. LARRY MCDONALD: Which explains the rise of
your Brexit Party. NIGEL FARAGE: And that’s why a brand new party,
the Brexit Party, could just appear. I sort of pulled the lid off, like a Jack-in-the-Box. It just appeared, and reached the top of the–
it was topping the polls and in this country within two weeks. And this is normally a country– LARRY MCDONALD:
And the seats in the European Parliament, relative to– how many new seats in the European
Parliament? NIGEL FARAGE: We won 29 of the seats– LARRY
MCDONALD: 29. NIGEL FARAGE: –in the European Parliament,
and we got more than 50% more votes than our nearest rivals. It was a dramatic victory, but it kind of
showed the disconnect between Parliament and the people. Boris took over. Many would argue this– that without the Brexit
Party being formed, Theresa May could have limped on a bit longer. Without the Brexit Party, Boris probably wouldn’t
have become leader, because what the Brexit Party did was to reset the agenda– to say,
look, we’ve had all this rubbish. This is what the vote was about. This is what we want. Boris finds himself in a very, very tight
spot. He’s got this parliament that is majority
remain. He’s also, I think, made a catastrophic mistake,
and that is to what we call Queen’s Speech– you would call it a State of the Union Speech
in America– once a year, setting out the legislative program for the coming year. We normally have Queen Speeches every single
year. We’ve not had one for a few years. In fact, this has been the longest time without
a King or Queen’s Speech since the English Civil War. So of itself– LARRY MCDONALD: And this speech
is coming up– NIGEL FARAGE: October 14. LARRY MCDONALD: October 14. So inside of 30– inside of a month from now. NIGEL FARAGE: Yeah. This speech of itself not unusual, but the
timing of it, with the Brexit deadline of the 31st of October, and the consequence of
it– meaning that Parliament is now closing for a few days, as we run down to that– has
been a catastrophic error. Because what it’s done– it’s united remainers
in the most amazing way. It’s led to this extraordinary case going
on in our own Supreme Court, as has the government acted lawfully. Did Boris lie to the queen? Extraordinary things that are going on at
the moment. I think that was a major, major error that
Boris made. LARRY MCDONALD: And he was thinking– doing
this and calling a– I wouldn’t call it a time out– but in putting Parliament in the
box– NIGEL FARAGE: Proroguing is the word. LARRY MCDONALD: Proroguing– by doing that,
he thought he would have the bandwidth to negotiate with the Macrons or the Brussels–
France, Brussels, Germany– without interference that Ms. May dealt with, that what he was
thinking. NIGEL FARAGE: Yeah, but actually, all he’s,
as I say, all he’s done is just to unite remain. LARRY MCDONALD: Yeah. NIGEL FARAGE: It’s been a mistake. Now, what I can tell you is this. I was sitting in the European Parliament yesterday. I exchanged the usual pleasantries with Mr.
Juncker and Mr. Barnier, as I always do. And I sat through a near four-hour debate
in that chamber yesterday morning, and there is a big change of tone coming from Brussels. LARRY MCDONALD: That’s what I wanted to ask
you. So this is important, because with– our audience
is a financial audience. NIGEL FARAGE: Yeah. LARRY MCDONALD: The Bear Traps Report– services
like ours focus on political risk for the markets. And in talking to our clients around the world,
there’s a couple of– not assumptions, but things that people have been working and pricing
in in their mind. Number one, you’ve had almost four years now
since the original Brexit vote almost had been next year. And a lot’s been priced, in terms of banks
leaving, and all– a lot of the dark scenario has not turned up. And the financial GDP, in some respects, is
even stronger in the UK BMI than they are in Germany. The question is, from clients that are spoken
to this morning, is since Miss May dealt with this a year ago in December, had that famous
ride in the parliament floor, where she held things together, the clients around the world
think that this German zoo, which is business confidence, down 15%, 20% over the last year–
PMIs, negative yielding bonds on the planet Earth a year ago, when Miss May was– trying
to think, it was $12, maybe $10 trillion– now we’re up to $17. So the political– I’m sorry– the economic
pressure on Germany, France, Brussels to really work with you, I think, has changed. NIGEL FARAGE: They’re scared. They’re scared. LARRY MCDONALD: So you have a stronger hand. NIGEL FARAGE: Here it is– Boris gets the
job, and he inherits the withdrawal agreement, the new European treaty. It’s been rejected three times by Parliament. Why? Well, there are lots of reasons, but the main
one is the so-called Irish backstop, which is virtually an attempt to annex part of the
United Kingdom. It’s just not acceptable. LARRY MCDONALD: And that’s the Irish backstop. NIGEL FARAGE: That’s the Irish backstop. Boris says they change the Irish backstop,
or we just leave with no deal. LARRY MCDONALD: Brussels, they’ve– NIGEL
FARAGE: They’ve got to change that backstop, or we will leave on October 31 with no deal. The markets took the talk of leaving with
no deal and the short-term uncertainty that that would create, and they kind of believed
it. The Jeremy Corbyn, the Lib Dem message, is
panic, we’re about to leave with no deal. It is rubbish. Boris is not going to leave with no deal. He just isn’t going to do it, because his
own Conservative Party, his own Parliamentary Conservative Party just won’t wear it. It isn’t going to happen. So back in July, when Boris first became the
prime minister and talked about changes to the backstop, it was all Mr. Tough Guy from
Juncker and Barnier. We’re not changing a thing. I sat and listened to every word of that yesterday,
and spoke to them face-to-face. And one of my colleagues, former stockbroker
guy, had a private meeting with Barnier yesterday. They are now scared. They are scared because the European economy
is turning down. Things are not pretty. And we are a mega export market for them,
and they trade with us. The annual surplus on trade between the EU
and the UK is over 100 billion euros. We drink an awful lot of their wine. We buy a lot of their cars. Great statistic– $110 million bottles of
Italian prosecco are sold in the UK every year. LARRY MCDONALD: $110 million. NIGEL FARAGE: Million bottles. It’s extraordinary. So they’re now getting quite worried. Could Johnson? Is Johnson bluffing? Could Johnson? They are now much keener to assuage Boris
Johnson. So yesterday, Juncker said, the backstop is
not, for me, an article of faith, provided we get the protections that are needed. And the protections are that the UK would
not go rogue and start selling goods into the European Union that were substandard. The protections are no emergence of what’s
called a hard border between Northern Ireland and the republic, because of the historical
30 years of troubles and all the rest of it. And I think this is what will happen. LARRY MCDONALD: We get an election this year? NIGEL FARAGE: There is a major European summit
on the 17th, 18th of October. LARRY MCDONALD: So the Queen’s Speech– NIGEL
FARAGE: Queen’s Speech on the 14th– he lays out his governmental program, which will partly
be Brexit, but also it’ll be other domestic stuff, as well. But the summit’s key. LARRY MCDONALD: EU summit. NIGEL FARAGE: The EU summit’s key. And I think it is now a strong probability
that Boris will come back on the 18th of October– LARRY MCDONALD: With something in his back
pocket. NIGEL FARAGE: –waving a piece of paper, as
British prime ministers often do, when they come back from negotiations in Europe– often
wrongly– and say, look, we’ve got a deal– the backstop’s not there– and then try and
ram it through Parliament. If he can’t do that, then there will be a
further extension. So all these big downside risks, short-term
risks to the UK, the pound, et cetera, I think they are melting away. LARRY MCDONALD: Yes. When we spoke earlier in the year, you were
bearish on the pound, and now you’re more– NIGEL FARAGE: Not anymore. No, not anymore. To me, we’re somewhere near the bottom of
a long historical downturn. LARRY MCDONALD: Now, walk us through the Corbyn
risk. NIGEL FARAGE: So that’s scenario one. Scenario one is– and that will happen. He could come back with nothing, but it’s
either with Boris. It’s either he gets an amended withdrawal
agreement passed in Parliament and we leave on the 31st of October, but we leave it on
what would be– well, listen, politically, I’d say, what’s the point? Because we’d still be so tied to all of that,
but it would be a– from the market’s short-term perspective, it would be a soft Brexit. Or we have an extension of a further– who’s
to say– three months, six months, nine months– I don’t know. I just do not think the no deal clean break
is going to happen on the 31st of October. I just don’t believe it will. The other scenario is that Labor– now, Labor,
who have been through this extraordinary transformation from being a party that said they were for
Brexit at the general election, are now almost wholly remain and second referendum. But they’ve played a very clever game, because
Boris tried to call a general election. They stopped him having a general election,
because they know that, if we haven’t left on the 31st of October, that Boris’s ratings
will be down, because he’s promised everybody– LARRY MCDONALD: Yes, yes. NIGEL FARAGE: So here’s the big thing. The big thing is, will Boris’s Queen’s Speech
get voted down? Will Labor lead the charge and vote it down? LARRY MCDONALD: Is that a no confidence? NIGEL FARAGE: Well, it would then turn into
a no confidence situation. So it could be that we get a general election
sometime late November, early December. That’s possible. It’s also possible that they’ll try and bring
Boris down anyway. And under– we’ve got this new piece of legislation. It’s called the Fixed-term Parliament Act,
and no one quite knows what it– LARRY MCDONALD: Fixed-term Parliament Act? NIGEL FARAGE: Yeah. Passed in 2010 by Cameron– dreadful piece
of law, like most things he did. It is possible that they vote against the
Queen’s Speech, and at the end of two weeks, rather than having a general election, if
Corbyn can get a majority, he could become a caretaker prime minister. Now, the market’s– LARRY MCDONALD: And that’s
a 31-day caretaker situation? NIGEL FARAGE: Well, who’s to say how long
it would be? But it would clearly be quite shortterm. So there is a possibility of a Corbyn caretaker
government. That risk is there, but it wouldn’t be a huge
risk, because he couldn’t do any of the things that he would like. We know what he wants to do, which is tax
the rich out of existence– completely change corporate law in Britain, the sort of Marxist
model of workers councils on the board, and– LARRY MCDONALD: And any empty property in
London, he wants to fill it, too. NIGEL FARAGE: Oh, yeah. And private companies having to give 10% of
their equity away. LARRY MCDONALD: Bank nationalization. NIGEL FARAGE: And nationalization. It’s real Marxist stuff. But again, even if he forms a caretaker government,
it will be very, very short-term. So I don’t think that, in terms of the way
the markets are viewing all of this, there may be significant political turmoil. Might be difficult to predict exactly where
this is going to go, but all of the scenarios, at some point, lead to a general election,
and a general election in which Corbyn cannot get a majority. He’s in real trouble. LARRY MCDONALD: So if Boris teams up with
your party– NIGEL FARAGE: Well, here’s the deal– now, President Trump sees this more
clearly than most, because he’s a numbers man. But if there was an electoral alliance between
Boris and myself, he would win a big majority. He’d win a big majority, the threat of Marxist
Corbyn will be gone, and he’d be able to get Brexit done. But I’ve put a very big offer on the table. But what I won’t accept, politically, is anything
based around this withdrawal agreement. Because frankly, even without the backstop,
it leaves us basically trapped inside the European Union’s Customs Union. And look, here’s the point– and this point
does not get made enough– that received wisdom from the research departments of JPMorgan,
Goldman Sachs, and Deutsche Bank has been that Brexit would be terrible for the British
economy. Truth of it is, actually, cutting free of
the Customs Union, becoming competitive would be phenomenal. LARRY MCDONALD: And so much capital’s already
left. NIGEL FARAGE: But the opportunity here is
amazing. The other big observation yesterday was, despite
all the conciliatory talk that we got from Barnier and Juncker, Barnier did say at the
end that, in the longer term, we will, post-Brexit, seek a trade relationship base with the United
Kingdom, and it will be around the Customs Union. They do not want us breaking out of this. Because this is the chance, even if there
are short-term bumps in the road– this is the chance for the UK economy to start to
become globally competitive, but much more competitive than its European neighbors. I see Brexit a bit like the 1979 moment, when
you go from a very, very heavily state-run economy, which is what Britain had in the
’70s, and you start freeing things up. LARRY MCDONALD: With some certainty? Once you give the markets, say, right, it’s
been four years of uncertainty– NIGEL FARAGE: Yeah, political certainty and a clear direction
of travel. LARRY MCDONALD: A fiscal plan. NIGEL FARAGE: Yep. LARRY MCDONALD: So this is what could happen
over the next six months. You and Boris potentially could deliver certainty,
a fiscal plan– which I’ve heard is anywhere from $20 to $50 billion fiscal stimulus–
NIGEL FARAGE: Well, the important thing for us, given our geography– next door to Europe–
given our economic interlinkage with Europe– I feel that the Eurozone is going into some
sort of slow gentle downward deflationary spiral. That’s how it looks, how it feels. That’s what negative rates and all these markers
tell me. So it’s really important for us, actually,
not to be dragged down with it. And yes, stimulus is one of the things we
can do, absolutely. LARRY MCDONALD: And your relationship with
President Trump, that’s– that might be a nice card in the back pocket for Boris, because
if you can do– at the same time you do a fiscal plan, if you can do a trade deal with
the US, what can you tell us about that in terms– NIGEL FARAGE: Well, I think, clearly,
there are– all trade deals are contentious, and all trade deals can take a long time. And they generally take a long time because
there are chapters of the negotiation that everyone gets stuck on– agriculture nearly
always being– despite being a small part of the economy– agriculture nearly always
being the blocker. LARRY MCDONALD: Gets the headlines. NIGEL FARAGE: Yeah. And there is a big cultural difference. There are some big GM differences. There are some big meat-rearing differences
between us and the US. But the cleverest plan I thought on this–
and he’s gone now– but it was John Bolton. John Bolton proposed a Swiss solution. So the Swiss negotiate trade deals with the
EU, for example, on a sectoral basis– 16 separate sectoral deals. And if we left on the 31st of October– LARRY
MCDONALD: That means sectoral based on industries? NIGEL FARAGE: Yes. Yes, absolutely. LARRY MCDONALD: So your automotive sector–
NIGEL FARAGE: Yeah, yeah, and the financial sector will accept that. LARRY MCDONALD: Each sector does a deal? NIGEL FARAGE: Yeah. And that was Bolton’s idea, and a really positive
way of doing them. Basically, if we did leave on the 31st of
October– I’m not sure we will, but if we did leave on the 31st of October, if we left
clean on the 31st of October, with what’s called a no deal, we could, by Christmas,
have signed up with the USA some sectoral deals. Pretty obvious, isn’t it? We’re selling Jaguar motor cars and we buy
Levi’s jeans, or Harley-Davidsons. and LARRY MCDONALD: That accelerates the economic activity. NIGEL FARAGE: Absolutely. But here’s the thing– I do want an American
audience, politically, to understand that, if the withdrawal agreement goes through,
we will be stuck in a transition period, which means, effectively, nothing will change. And that transition period is due to last
15 months, but is extendable for a further two years. And we would not, during that transition period,
be able to sign any trade deals with anybody. LARRY MCDONALD: Purgatory. NIGEL FARAGE: And this is why, to me, the
clean break is the only way forward, because it leaves us free to get on and start to do
things. And all right, there might be some short-term–
I mean, all change. Moving house brings difficulty, changing relationships
brings even bigger difficulty. All change in life brings difficulty. But my fear is that Boris– my political fear
is that Boris gets this withdrawal agreement through Parliament with this amendment to
the backstop, and then we’re still stuck in limbo for years and years to come. LARRY MCDONALD: And what you’re saying, essentially,
is that, over the last three years, the risk reward of leaving has improved. In other words, your upside of leaving versus,
say, an immediate hard Brexit, your risk has been somewhat reduced, and your upside’s improved
because of this potential– either a fiscal stimulus and a trade deal. And counter to that, by staying, you’re down–
the risk reward’s gone worse. NIGEL FARAGE: I think it has. I do. And I think one of the problems here now–
one thing that is certain– employment’s at record levels. We’re doing relatively well, compared to our
European neighbors, economically. But investment is slowing to a standstill,
and I think investment wants a political decision to get finally made and for us to move. And my fear with the withdrawal agreement
is it would leave us stuck in that limbo for many more years to come. And that’s why I am trying to say to Boris,
look, you’re going down the wrong direction. Go for the clean break. Work with me. We’ll achieve it. And you know what, if with a clean break,
the pound fell a few cents on day one and day two, just buy it. LARRY MCDONALD: A thesis that we have the
Bear Traps Report, and I’m hearing more and more around the world from clients– we’ve
done so many years of central banks– dealing with political uncertainty and more and more
pressures on the central banks– the Bank of England, the ECB, the Fed– at the end
of the day, a fiscal stimulus plan out of Europe– the probability of that is rising
from countries, like the Netherlands. Even Germany now is– What do you think about
central banks– I’ve always wanted to ask you– central banks and how much pressure’s
been on them? And are we coming to a point where, because
of the populist movement and some of the things– the engines that you’ve created, could we
create an impetus for more fiscal policy coming from the Eurozone? NIGEL FARAGE: Well, is interesting, isn’t
it? Because the Bank of England, for example,
in this country, when I was younger, did the bidding of the government– simple as that. They were declared independent in the 1990s. But now, what we see right across the West–
particularly America– is almost like political warfare going on between governments and central
banks over who should do what. And it’s a big question, isn’t it? Should central banks act independently of
government, or should central banks act effectively as an arm of elected government? LARRY MCDONALD: MMT, modern monetary theory–
NIGEL FARAGE: And it’s a very interesting debate. Being the radical that I am, and believing
that democracy, ultimately, should prevail, and that we should succeed or fail on our
electoral judgments, I am minded to think that, actually, independent central banks
have got a very limited future– that this friction that now exists between governments
of central banks can’t go on. I don’t see how you can have a president and
the Fed at war with each other constantly. It’s just not working. The difficulty, of course– the downside of
the argument, of course, is that a lot of decisions you make, in terms of fiscal policy
or monetary policy, don’t impact immediately. They impact and kick in 18 months, two years
down the road. And that’s the downside of it. But I do think that this separation of function
of the two is coming under pressure. LARRY MCDONALD: Do the politicians respond
with more fiscal– in other words, fiscal spending deficits– NIGEL FARAGE: Yeah, they
will. Look, it’s all they understand. And right at the moment, faced with an economic
downturn, they feel– LARRY MCDONALD: So we’ve had austerity and– NIGEL FARAGE: I know. LARRY MCDONALD: –for years, with the Greeks–
even the UK, throughout Europe, we’ve had such austerity. NIGEL FARAGE: No, we’re about to. And with interest rates where they are, and
everything else– LARRY MCDONALD: Yeah, that’s the thing. You’ve got, essentially, free money to play
with. NIGEL FARAGE: You might as well do what you
can to stop a downward deflationary spiral. I just feel, in Europe, even doing that, I
think some of the longer term problems are very, very serious. I think Germany’s reliance on the motor car,
as we head towards electric motor cars– LARRY MCDONALD: Yeah, the German economy– autos
and auto parts– NIGEL FARAGE: Yeah, massive– and to be fair, they’ve been jolly good at
it. But electric cars, what it’s all about battery. LARRY MCDONALD: Some secular massive changes. NIGEL FARAGE: You’ve also got the driverless
car, perhaps, not terribly far away– the EU resisting driverless cars, by the way,
as much as they can, for obvious reasons. And the cultural thing– kids don’t buy cars
anymore. We used to buy cars, Larry. That’s one of the things we wanted to do. But kids don’t buy cars, and kids live a much
more urban lifestyle than ever before. So there are some longer term cultural problems,
I think, that Germany’s got. And Italy, well, you just look Italian industry,
Italian infrastructure– it’s not been invested in for a very, very long time. It just falls further and further behind its
competition with every year that goes by. And France, still suffering from too much
state in the economy, repressive labor laws. Whatever the ECB decides to do with stimulus,
I don’t think the outlook for the Eurozone is rosy at all. LARRY MCDONALD: So we get a Brexit– a hard
Brexit within six months and an election, they get– NIGEL FARAGE: I don’t know. I don’t know. I’m saying to you there could be a so-called
hard Brexit, but it’s entirely in David Cameron’s hands. He couldn’t do it on his own. LARRY MCDONALD: Boris. NIGEL FARAGE: Sorry, I apologize. I’d say– it’s the week of Cameron’s memoirs. I’ve got them on the brain. It’s because of the nasty things he said about
me. LARRY MCDONALD: What would you say, the land
of the unemployed? NIGEL FARAGE: Yeah. Yeah. No, it’s Boris’s choice. And if Boris decides to do a deal with me,
at some point we had an election to work together, we would get– some call it hard Brexit. I call it clean Brexit. But I think longer term, it would give a certitude,
and I believe, huge opportunity. LARRY MCDONALD: Well, it’s been a pleasure
to have you– NIGEL FARAGE: Thank you. LARRY MCDONALD: — to watch your career from
almost 15, 20 years ago. You were alone in the European Parliament–
a lone man. NIGEL FARAGE: Very. LARRY MCDONALD: And now, there are thousands
and thousands behind you, as I see you walk through the streets of London. It feels like every year, you just have a
little bit more energy and more people that have taken– NIGEL FARAGE: Yeah. What I’ve done has led to an outbreak of this
disease right across Europe. It’s called democracy. LARRY MCDONALD: Pleasure. NIGEL FARAGE: Thank you. LARRY MCDONALD: Good to see you, my friend.

Excel Finance Class 09: Balance Sheet, Working Capital, Liquidity, Debt, Equity, Market Value


Welcome to Excel in
Finance video number 8. Hey, if you want to download
this workbook and follow along, click on the link
directly below this video. If you’re in the class, just
go to our class website. Hey, these videos, I’m going
to shoot them full screen. Usually I make
them kind of small. So you definitely, if
you’re watching this, want to hit the
Full Screen button. Hey, Chapter 2– Chapter 1, we talked
about introductory terms, the goal of finance,
and things like that. In this chapter,
we’re going to talk about financial statements,
different aspects of the balance sheet and
the income statement, but all in terms of what finance
people do with the numbers, not accounting people. So accounting people
see the numbers on the balance sheet
and the income statement and use the numbers differently
than finance people. And in particular, the
last couple of videos will talk about
calculating cash flows from financial statements. Accountants do accrual
accounting, which does not necessarily reflect cash flow. So we as finance people
need to calculate cash flow from financial statements. And we’ll talk about the
difference between average and marginal tax rates. All right, first, we’ll take
a look at the balance sheet. I’m going to click on
this tab right here. Balance sheet, last video,
we talked about assets equal liabilities plus equity. That is the fundamental
accounting equation. Not just accounting, finance. Everyone dealing with
businesses and numbers uses this equation here. The balance sheet
just reflects this. Assets on one side equals. And then there’s
two other things on the other side, some
liabilities and some equity. Now, I have in this
sheet here, if you point to these little red
comments, they have notes. Last chapter and in
chapters coming up, I’m going to have lots of PDFs. In this chapter, I just
don’t really have– I have one PDF that shows
a deductive proof for one of the formulas
we’re going to use. But otherwise, all the
notes are in this workbook. Now, this is a note,
for those of you who have done accounting. And actually, you can Right
Click that and say Show Hide, and then it will show. In this class, we will not
prepare financial statements. We will use them as a
source of information. Actually, that’s not quite true. We’re going to do really, really
basic financial statements with condensed numbers that
finance people would use. The financial statements
we see in this textbook will be condensed. And we’ll ignore such
things as proper titles, showing the proper expenses. When we have
interest and tax, it should be interest
expense, tax expense. We’ll list them lots of ways. But if you see interest
paid and tax paid, usually in accounting
you don’t want to list expenses like that. And in finance, we can go ahead
and list things like that. If you want to move the comment,
you can point to the edge and just click and drag. If you want to hide it, you
can Right Click Hide Comment. Now, assets, current assets,
these are assets like cash, accounts receivable. What’s accounts receivable? Accounts receivable is something
that will be cash soon. This is when Home Depot gives
the lumber to the contractor and the contractor pays
them 30 days later. So when you see accounts
receivable $465, or millions as it may be here– it looks like my screen
is not, there we go, in millions– that means
that number of dollars is owed to Home Depot. So accounts receivable is like
a holding tank until we get the cash from the customers. We’ve extended credit. So cash, accounts
receivable, inventory. These are all called or
classified as current assets, because these can be converted
into cash in a year or less, or the normal operating cycle. Now, think about this. Accounts receivable,
hopefully we’re going to collect it within
the next 30 days or 60 days or whatever it is. Inventory, the whole point of
having inventory in your store is so you could sell
it and get cash. So current assets. Now, this is very important
not only in finance, but accounting and auditing
and all sorts of banking. It’s very important to see
a business’s current assets. Because if they don’t have
very many current assets, perhaps they can’t
pay their bills. In addition, we will
talk about the other side of the equation– liabilities,
current liabilities. Well, if this is collect
cash in a year or less, this is pay cash
in a year or less. And that’s current liabilities. Current liabilities
are the bills that we have to pay
within one year or less, or the normal operating period. So this is cash out. This current assets are cash
in for all sorts of people– accountants, bankers,
financiers, internal managers. They always need to know current
assets, current liabilities. Because if this is the cash
out, this is the cash in, if cash out starts to get bigger
in the short-term than cash in, then you need to do something. You’re either in
trouble, or you need to do some financing like
going out and getting a loan or trying to collect
accounts receivable more quickly, something like that. All right, and then
on the asset side, we have fixed assets
or long-term assets. These are your building,
your trucks, your patents. The long term assets that
actually define your business and are the assets
that you’ve invested in because you think you
can make a profit from them. So UPS has a lot of brown
trucks because they’re in the delivery business. A manufacturing firm maybe
has a lot of buildings and has a lot of
equipment to manufacturer whatever it is
they’re manufacturing. Fixed assets
long-term– now, we’re going to see net fixed assets. That means whatever the original
historical cost of your asset– your machine, your truck–
minus the depreciation. And we’ll talk about
depreciation in just a bit. Then we have total assets. Now, many financial statements
show multiple periods. And the reason
why is because you want to see what is
the change, right? Cash was this. Cash went up. Accounts receivable was this. It went up. All right, so you want
to see the difference. And in this class,
we are going to– in this chapter, next chapter– we’ll be calculating
the difference. Now, let me ask you a question. Balance sheet is, it says up
here snapshot of the account balances on the last
day of the period. So really, if this is 2007 and
our ending year is December 31, this balance right here
is December 31, 2007. Now, what about this one? This is December 31, 2006. So what’s the difference
between the two? Well, it’s the ending
amount from 2007. We take that and
we subtract from it the very beginning amount
in the beginning of 2007. Well, the beginning
of 2007 is always whatever the balance was on
the last day of the last year. And for example, in
Chapter 2, we probably do this calculation end minus
begin 50 times in the homework. Some homework problems literally
have you do it 20 times. Because we’re going to be
analyzing the balance sheet. And we need to know
the change, right? An example of a change
that might not be so good– imagine if accounts receivable
went up, ballooned massively, much more than your sales. That could mean something
like you’re not collecting your accounts receivable. And that could lead to trouble. All right, assets–
current assets, fixed assets, and then total. Liabilities and equity,
these are the assets we buy. This is the source of funds. We either go out and get
debt, current liabilities, or long-term debt. Or we issue equity to
get our funds, which means our cash we’re going
to use to buy our assets. So let’s look here. Accounts payable, notes
payable, short-term, right? This is when we go out and we
owe people for some products or something like that. This is when you actually
go out and borrow money. But you have long-term
debt, short-term debt. On the balance sheet, you’ve
got to break it apart, whatever current
part must be listed in the current liabilities. Which means it’s owed
within one year or less. Long-term, both
of these are debt. I mean, all of this is debt. All right, and then
we have equity. The common stock–
sometimes you’ll just see equity when we have
our little mini balance sheets in this class. But other times you’ll
see common stock and paid in surplus. All that means is, common
stock, if the original stock was supposed to be priced at 10
bucks and it got sold for 12, the paid in surplus is the $2.00
above the 10 it was supposed to sell for. But that’s the amount
that stockholders pay to become owners. And then, retained
earnings, that’s the net income from the income
statement over the years that it’s accumulated. So you can do two things. And we’ll do this
in this chapter. Every time you make some
profit, you can either pay it out as dividends or
plow it back into the company, keep it in the equity
section, and then it’s available for whatever
assets you want to invest in. All right, so then
we add it all up. Total liabilities
plus the total equity equals liability
plus owner’s equity. Now, why is it called
the balance sheet here? Oh, because there’s an
equal sign right there. This has to equal this. So we go like this, right? Equals– and I’m
going to do 2007, that one, Tab, equals this. And I’m going to say,
is this equal sign, is that cell equal
to this cell, Tab? True. All right, so that’s why
it’s the balance sheet. All right, working capital. We were talking about current
assets and current liabilities. Let’s go up and talk about
current working capital. Oh, right, we mentioned
this earlier, right? If current liabilities are
getting too big, or even much bigger than current assets,
you’re kind of in trouble, right? Because if this is
current assets– things like cash
inventory, accounts receivable– it
means cash coming in. This is all the short-term
debts, meaning cash going out. Well, if cash going out is much
greater than the cash coming in, you’re in trouble. And so net working
capital is the term pretty much everyone uses,
accountants and financiers, for the difference
between these two. And in this chapter,
we will calculate it when we do our cash
flow calculations. And in next chapter when we do
financial statement analysis, it will be an important
ratio and measure. Net working capital is the
short-term capital of cash that the firm has to work with. It’s not always cash,
but it’s as-if, right? Because all of
this is supposedly going to be converted to cash
within one year, and this also. Capital is a term
that means assets. This term is often used
in economics and finance. So in accounting, you’ll
see net working capital. But in finance, you’ll see
capital referring to the assets all the time. In accounting, you see assets. But the one exception
is net working capital. All right, so here
in this cell, now I’m on this sheet working capital. And my balance sheet
is back over here. And I want to calculate
our net working capital here for at the end of 2006. So I’m going to do
a formula, and we’re going to use sheet references. Now, equal sign is the symbol
you put in to say, hey, Excel, I’m going to do a calculation. And to get some numbers
on a different sheet, you just gotta
type the equal sign and then click on that sheet. All right, here is the 2006. And again, balance sheet
is always the last day of whatever period. This one’s a year, by the way. It could be a month. Or even some companies
have everything automated, and they do it by the day. Nevertheless, current assets
minus current liabilities, all right? So I’m going to come down here. Let’s see, total, this is
2006 current assets total. Now, look up here. You can see the formula. Equals– and then,
balance sheet, that exclamation
point means this is on a different
sheet, and then B13. I’m going to type a minus. And watch what happens. Right there, you
can see that minus. And then I’m going to
click current liability total for 2006. Now, notice up in
the formula bar here, we can see our formula. It’s really just
two cell references. But they happen to be on the
sheet called balance sheet. Now, those little
apostrophes usually come around because if you have
spaces, it doesn’t like spaces. So it puts that
single apostrophe. But that exclamation point
is what tells the formula, this is a sheet name. All right, now, as soon
as you get it done, do not click back on the sheet. You can see this one,
we’re building it here. But that one’s white
because that’s where the formula is being created. Do not click back. Because it will
ruin your formula. What you do is, you hit Enter. Now I’m going to
click right here, and I’m going to hit the F2 key. There it is. There is our formula. OK, so that’s pretty good. Now, net working capital
is all over the place. Different businesses,
different industries have different numbers
that are good or bad. But in general, you
want it positive. Now, let’s go over
to a different sheet. I’m going to jump to the sheet– where is it? I can’t see it. I’m using my little arrows
over here to see where it– oh, there it is. It’s right there. Liquidity, I want to
come over to liquidity. Liquidity is how quickly an
asset can be converted to cash. All right, now,
liquidity is important just like working
capital is important. Because if you run out of
cash, you’re in trouble. The number one reason that
businesses big and small, not just mom and pop stores– people that run
small businesses– but all the way up
to gigantic banks. As we saw in the financial
crisis, people ran out of cash. So liquidity is very important. If your working capital
is getting too small, maybe you have to sell
assets so you can get cash. And in fact, that’s
what happened during the financial crisis. People tried to sell assets. But during a financial
crisis, hard to sell assets unless you’re going to
give a really low price. So let’s talk about liquidity. Liquidity, how quickly an asset
could be converted to cash. Just straight, simple–
how liquid is cash? It’s the most liquid. How about inventory or
accounts receivable? Those are pretty liquid. If you’re not in a
financial crisis, you could sell
those in emergency. In fact, you could sell
accounts receivable to banks, for example. All right. So those are examples of
assets that can quickly be converted to cash. What about a building? What about your truck? What about your
machines in the shop? Well, you probably don’t
want to sell those, right? Those are examples of
assets that are less liquid. All right, liquidity
has two dimensions. Ease of conversion
to cash– again, cash accounts receivable, easy. Your machines in your
shop or your buildings are less easy to
convert to cash. The other aspect of
liquidity is loss of value because you have
to sell it quickly. Because you can
pretty much, except for in a financial crisis,
you can pretty much sell anything quickly if you
reduce the price enough, right? So the building, it is hard
to sell real estate sometimes. It’s hard to sell
a machine quickly. But if you lower
the price enough, a fire sale, in essence,
you probably could sell it. So liquidity has two dimensions. You really, when you’re
measuring liquidity, you want to be able to not
only convert it to cash quickly but not lose a lot of value. Another aspect– we
mentioned selling assets. Another aspect of
liquidity is businesses that can go out and get a
loan quickly have access to liquidity because they
can get cash quickly, not just an asset sometimes. OK, highly liquid assets quickly
sold without significant loss, inventory. Short-term investments, right? So a lot of times,
you’ll see people invest in short-term bonds
or something like that. Illiquid assets cannot be sold
quickly without significant price reduction–
machine, building. Ah, but what about
the financial crisis? What happened with
the financial crisis, everyone had more
debt, too much debt. And in specific, it
was mortgage debt. Even more specifically,
it was things called collateralized debt
obligations, which was just a lot of mortgage debt. And when the financial
crisis hit and everyone knew that the housing
prices were going down and that debt on those
houses was no good, they couldn’t sell it. Before the financial crisis,
they had liquid assets. They could go out in
the financial markets and sell them. But during the financial
crisis, forget it. It was as if everything froze
up, everything was illiquid. Items on the balance
sheet are listed in order of decreasing liquidity. So if you go back and we
look at our balance sheet, right, oh, that’s
why cash is first and fixed assets are last. Liquidity– liquidity
is valuable. Firms can readily pay bills
and buy assets quickly. So we’ve mentioned
this one earlier. You’ve got to have enough
cash or working capital to pay your bills, right? But there’s another aspect. If you look around sometimes,
Microsoft over the years before– and other big companies– sometimes you see that
they have a lot of cash. And you’re thinking, why do they
have all that cash in the bank? Because cash in the bank doesn’t
earn a very big return, right? If you have a lot of cash, you
should go buy whatever assets. UPS is buying trucks. Google is buying up buildings
to put server computers in. So if someone has
a lot of cash, it could be that they’re saving up
to buy assets quickly or take over companies. Like, Microsoft, always
had a lot of cash because if they wanted
to buy a company. So liquidity is valuable
because you can pay your bills and buy assets quickly. Liquidity assets
such as cash tend to be less profitable
than illiquid assets such as buildings, trucks,
subdivisions of business, as we just mentioned, right? You probably don’t want
to have too much cash because you can’t
earn as much as if you invest in profitable assets. Now, sometimes it’s– like
right now, this is 2010. The financial
crisis 2007 to 2010, businesses have tons of cash. Because they’re not quite
sure what to invest in. And they’re nervous. Because during the crisis,
liquidity dried up, and they didn’t have anything. So they’re saving
lots of extra cash just in case things
get in trouble. All right, let’s do
a little bit of– I’m going to go over
to the sheet called building a balance sheet. In this chapter, we’re going
to have lots of homework. And let’s see how to do this. We’re going to be given
little small problems. These are not real
balance sheets. But they’re, in essence, a
summarized reduced balance sheet. We’re going to be giving
things like current assets, fixed assets,
current liabilities, and long-term debt. Notice they don’t give
us anything about equity. In this class and throughout
the whole textbook, we’re always going to have
to back in to numbers. All right, so total assets. Well, if we have our 250– I’ve already built this. These formulas are looking
up to these assumptions here. So I have current
assets and fixed assets. So we’ll do that. In the homework, I’m going
to give you templates. And then you just type
these in, and then you build all formulas here. Total assets, I’m going
to say equals SUM, and then highlight these
two cells right there. You can see right here,
the equal sign, it looks like the equal
sign is in that cell, but when you click
there, there’s nothing. So I’m going to
click on this column and drag it to make
it a little bit wider. Now, total liabilities,
again, I did the same thing. Looking up there. I’m going to Alt equal. That’s the keyboard shortcut
for Auto Sum, and Enter. But how in the world are we
going to calculate equity? Well, let’s see–
oh, guess what– the fundamental
accounting equation. If this is all the liabilities
and this is all the assets, remember, the
definition of equity is assets minus the total debt. So this is an example
of backing in. And some of the
backing into answers in this for homework
in this class will actually be quite tricky. We’ll have some examples
of that coming up. So there we go, Enter– 480. So now I’m going to
equals SUM because I want to add this up,
and triple check. And then, whoops, notice
I have a minus there. That will give me a minus sign. I meant to type an equal sign. All right, now, working
capital, always going to be current assets
minus current liabilities. Now, this is the working capital
at this particular moment in time. Because balance
sheets are always one day, a particular
moment in time. It is a camera taking a
picture of all the accounts. All right, current assets
minus current liabilities. Oh, look at that. They have a positive
working capital. All right, let’s go
over to debt and equity. We’re still talking
about the balance sheet. In finance, we have assets. Oh, that’s the use of the
funds on the other side of the equation. I’m going to jump over. We have debt and equity. Source of funds– now,
what’s the difference? This is a fixed claim contract. It’s a contractual claim. You must pay the
full amount back at some point in the
future and interest. It’s a contract. This is a residual claim. Guess what– when you go out
and invest in the stock market, does the company have to
pay you back by contract the full amount? So you bought a
stock for 10 bucks. Does it have to pay you back? No way. If it goes bankrupt
and there’s not enough money to even pay off
the creditors, you get nothing. So residual means leftover. Not only that, but dividends. Just here’s contract, right? It says you must pay
interest, 5% interest, right? You must pay it. It’s a contract. You don’t get paid,
you go to court. And you go into bankruptcy. But this, forget it. Dividends are only paid when
there’s something left over. Now, what is the upside? Why would people ever do
equity if it’s always residual? Because if it’s a good idea–
think about the early investors in Microsoft– if it’s a good idea, you can
make a lot of money, right? Interest expense is a cash out. And it is tax-deductible, wow. We’re going to see an example
of that just coming up here. But because it’s tax deductible,
when you pay interest, there’s cash interest. Let’s just say $25 going out. Because you get to put
it on your tax return and subtract it, it means you
will avoid paying some taxes, avoid if you hadn’t
incurred debt. So when you pay out
25 bucks, actually you get a little
benefit on your tax. So it’s not a total $25. Maybe it’s 23 net
that you will get. And we will see an
example of that. Tax-deductible, huge
advantage to debt. That is why over
the last quarter century companies have
loaded up on debt a lot, because there’s a benefit. Dividends cash out is
not tax-deductible. And we’ll see an example. We’ll compare
buying a new machine and using debt and equity. And we’ll see that there is a
small advantage of using debt. Debt also is paid off
first during bankruptcy. You get whatever is left over. All right, let’s go to
this next sheet here. Debt– I just want to
point out the word, well, the topic
of whether to use debt or equity to raise funds
is called capital structure. The term financial leverage is
used when the firm has debt. So leverage, it just means
like a big leverage thing. You can actually, if
you’re using debt wisely, you have a
tax-deductible advantage. And we’ll see an
example of that later. But leverage is
the word they use. Next chapter, in Chapter 3,
when we do financial ratios, we’ll have ratios
that will tell us how much leverage we’re using. The more debt as a percentage
of assets, the more leverage. And leverage can magnify
in gains and losses. More later on that. Market value versus book value. I think this is our last topic
in this video about the balance sheet. And then, the next video,
we’ll do income statement. Market value, that’s
the amount of cash we would get if you sold it. Now, market value, you
hear a lot about this. Market value for
financial assets like stocks, and debt
sometimes, right? You actually can
go out and see what the market value is every day. But most assets– all the
machines and the trucks and the buildings, and all
sorts of other assets– don’t really have a market
where you can go and see what the actual price is
if you sell it, right? So market value can
be slippery sometimes. People make estimates. But it’s only for
debt that have markets where we can go see a price that
market value is easy to get. Otherwise, forget it. You do not know for
sure until you sell it. You never know for
sure until you sell it. Book value, this is
what accountants have been doing for a long time. Because how in the world are
you going to get market value? So accountants say, forget it. Book value is more reliable. When I buy the thing– the business, the
inventory, the building, whatever it is– that receipt
told me how much it is. And that’s what I’m
going to record it. This is called the
historical cost principle. Required by GAAP, generally
accepted accounting principles. Ah, except some financial assets
are recorded as market value. And actually, there’s
a huge debate. Right before the
financial crisis, the FASB and other regulations
for accounting said that businesses had to record
many financial assets, particularly in banks, had
to record financial assets– debt and assets– at market value. But what happened during
the financial crisis is that many of their assets
they couldn’t sell anywhere, and they had no idea
what the price was. They had to write it down. And they had to do
a lot of guessing. So market value,
actually, although it’s a pretty good idea, it’s
being heavily debated. Because if we have bubbles,
like our housing bubble or the dot com
bubble in the ’90s, then there’s a problem
with recording things at market value. Actually, the FASB, the
generally accepted accounting principles before
the crisis said banks had to record
things at market value. And actually, it was suspended. And now it’s being debated
whether it’s a good idea or not. But in general, at least through
the history of accounting, accountants have recorded
things at historical cost. Book value of
assets often doesn’t reflect the firm’s
most valuable assets such as talented
employees and managers. More and more,
employees are really what can make a
particular entity worth whatever it’s worth. But there’s no asset
called employees. Customer lists,
reputation– not only that, but the actual, all the
things that they buy can change radically. The actual tangible– these
are all intangible assets. But tangible assets also
can change a lot also. That’s why if you look at
publicly traded companies, their market value,
if you look and see, all the stocks, whatever it’s
worth in the stock market can be radically different than
what’s on their balance sheet. Stockholders’ equity, market
value for share of stock is virtually always different
than the book value– and we just said that– since the goal of
financial management is to maximize the market
value of the stock. And again, we talked about
the problems with that. But again, in theory, that’s a
good value if that’s the goal. Thus, the financial manager is
interested in market value, not book value. And sometimes for a
financial manager, you can. You can go out and look
at the stock market and see what the value
of that stock is. And you know how many there are. So you can actually very
easily calculate market value and compare it to
the book value. Which, book value just
means the total asset value on your balance sheet. All right, let’s try
a little example here. We have a few homework problems
where we’re going to do this. We will just be
given the numbers. We’re not going to have to
go out and do research on it. Fixed assets book value, fixed
assets appraised market value. Now, that says appraised. But again, if it’s a
publicly traded company, you can easily get the stock
value at any particular moment and then the number of shares
outstanding and calculate that. Net working capital book
value, that’s all in our books. Net working capital
market value, that could be pretty slippery. But perhaps inventory increased
in value or went down. In this example, it went up. –long-term debt. We want to calculate what is
the book value of equity, what is the market value of equity. Well, here’s our book net
working capital right there. And the market equals
this 800, Enter. Net fixed assets, the book
value right there, Tab. And then this one right here. All right, now we
have book and market. Now, I’m going to
highlight these two cells and use the keyboard
shortcut Alt equals– Alt equals is Auto Sum. Notice it did both
of them at once. If you don’t believe it, hit
the F2 key, and you can see, sure enough, it got it right. All right, now let’s
come over here. They gave us debt. We’re going to have to
back into our equity again. The debt, I’m going
to go right there. Tab– oh, we’re going to assume
that the debt didn’t change. So I’m going to say
that one right there. And well, now what do we do? What’s the stockholders’ equity? Oh, well, we can back
into this again, right, just like we did in
our last example. There’s total assets. Actually, I better
put total assets. I probably could have
put just TA there. We’ll use that a lot next
chapter, total assets. Well, right here if this
is total assets, boom, and there’s our debt,
the definition of equity is residual. So equals this–
now, watch this. I’m going to do this as
a formula minus this. Now really, for some of us in
this class who are brand new to Excel, this is a
relative cell reference, as we mentioned in Chapter 00. This formula is really saying,
hey, go 1, 2, 3, 4 to my left and then one down. OK, and this one’s saying,
hey, look one above. I’m going to Control Enter. That puts the formula in the
cell and keeps it highlighted. And watch this. I can just copy this over. Why? I’m going to click
here and hit F2. Because this is still 1, 2,
3, 4 to my left and one below. And this is still
looking one above. And now we can check
this, Alt equals. OK, so that’s just
a little example of market value and book value. All right, next video, we will
talk about the income statement and things like depreciation
and accrual accounting, and then move our way
towards cash flows for finance calculations
from financial statements. All right, see you next video.

Educational Moment- For the Self-Employed to Consider


Hey everyone this is Ronnie with your
next educational moment. A few weeks ago we asked for some feedback on some
questions that people had that are clients and we had one in particular who
is self-employed, she’s actually a hair stylist, and she was asking about things
for the self-employed to consider or think of. So really there’s three main
areas that I’d like to talk about. The first is 1099 income and taking
advantage of the fact that you’re getting income as a self-employed person
prior to that paying taxes. The second is good cash flow and accounting and the
third is best ways to protect yourself. So the first is 1099 income. When you
work for somebody else you get a W-2 get income after taxes so the company withholds taxes from you. When you’re self-employed typically you have an
option to get 1099 income. 1099 income allows you to essentially receive
that income and not yet pay taxes. So the advantage there is essentially to be
able to get some deductions and some other things so you’re not spending out
as much money and using that as efficient as possible. That segues into
the second, which is good accounting. The first thing is to find and identify a
really good accountant or CPA, Certified Public Accountant. Really the thing I
would say there is you get what you pay for. You don’t want to skim there you
want to make sure that you spend the appropriate money to make sure that you
have a professional who can help you better reduce those taxes like we
discussed with 1099 income and also have helped you budget and cashflow. And third
and final is protecting yourself. As a business owner you have a lot of liabilities
whether you drive, whether you’re helping people, in this case whether you’re
cutting people’s hair, people get injured people slip and fall. You always want to
make sure that you’re protected so it’s really good to make sure that you’re
consulting somebody that’s a professional that can help you identify the areas of
risk where you have your liability and how most of cost effectively to be able
to protect yourself from that. So when it comes to the budgeting and some of the
tax pieces as far as planning is concerned we’re always here to help and
always ask questions. So if there’s anything please reach out, thank you.

Where will Buffett find his next blockbuster deal? | FT


These days, Warren Buffett likes to say he’s
on the hunt for elephant-sized acquisitions. But the Oracle of Omaha has had trouble finding
multibillion-dollar deals that move the needle for his investment company Berkshire Hathaway. And that is a problem when you have a big
cash pile sitting on your balance sheet. Shareholders may worship Buffett and his co-partner,
Charlie Munger, but at some point they will demand some of that money back either via
share buybacks or dividends. Buffett has argued that his long-term track
record of outperformance against the S&P 500 speaks for itself. Investors should be patient,
he says. The good news for Buffett is that one opportunity
has already fallen into his lap this year. Berkshire pledged $10bn to buy preference
shares in Occidental Petroleum. The Texas oil group needed financing to back
its $55bn takeover of rival Anadarko Petroleum. That would help it win a bidding war for Anadarko
against larger rival Chevron. It was the first big Berkshire deal in a while, But even at $10bn, it’s not as big as Buffett
would like. The last truly big Berkshire takeover came
in 2016, when Buffett’s group spent $37bn to purchase industrial goods company Precision
Castparts. It hasn’t all been smooth sailing for Berkshire
in big deals. It backed a 2013 takeover of US condiments
group Heinz and later combined it with Kraft Foods to create a major US foods group in
2015. Two years later, Kraft Heinz tried to take
over Anglo-Dutch group Unilever for $143bn. But it had to back out after its approach
was publicly rebuffed. Warren Buffett, after all, doesn’t like
to be associated with hostile deals. Since the Unilever bid, Kraft Heinz has struggled. Recently it had to make a $15bn writedown
and even Buffett had to admit that he overpaid when combining Kraft with Heinz. So where will Buffett look next? Brexit Britain,
where many companies could face an uncertain future, may be one place where Berkshire sees
value. In an interview with the FT, Buffett said
he is ready to buy something in the UK tomorrow.

How to Organize Income & Assets : Financial Planning for the Self Employed


Hello, my name is Brett Staggs and on behalf
of Expert Village, I am here to show you how to organize your income and assets for a first
time home buyer. When applying for your first home loan, if you are self employed person,
there is no reason to fear. There is plenty of ways to use your job and your income just
like any other job even if you are self employed. The trick to it is you have to either have
a very good CPA, a Certified Public Accountant who can help you out and has been doing your
taxes for the past two years. They will write you what is called a CPA letter, which basically
tells you this person has been self employed for the past two years. And another bit to
it is you have to be in the same location and you also have to be in the same line of
work. And your CPA will write that letter for you saying, ‘I have been doing this person’s
taxes for the past two years have been in the same place, the same city and they have
been doing the same work.’ And then your job is looked at by the bank just like any other
job. If for some reason you don’t have someone do your taxes, if you do your own taxes yourself,
that is fine too. What you need to do is show your business license. And they will track
your business license number and they will be able to see that you have been doing it
for X-amount of years in this city and it is this type of work. So when you fill out
your loan application you want to make sure you put self employed right up front so that
the people helping you with your loan could get started in gathering that documentation.
Then just give them the name of your business, how much you make a month and with the right
documentation they will look at it just like any other job.

13 Auditor Working Papers


0:00:08.000,0:00:11.066 I like this lesson a lot. Why? 0:00:11.066,0:00:17.000 Because as an accountant who has worked both in public practice and in industry, the discipline of preparing well documented, 0:00:17.000,0:00:21.000 and organized working papers is equally applicable. 0:00:21.000,0:00:27.066 In public accounting, GAAS requires the auditor to document all the evidence that supports
the audit opinion. 0:00:27.066,0:00:33.000 As a reminder, this would include: Risk assessments and the basis of such risk assessments, 0:00:33.000,0:00:37.033 the procedures or tests performed, information obtained, and your conclusions reached. 0:00:37.033,0:00:45.066 In public accounting, the auditors must assemble the final version of the audit file
within 60 days of the date of the audit report, 0:00:45.066,0:00:50.066 at which time the firms initiate a what is
called a file freeze. 0:00:50.066,0:00:54.000 New information received after this time would be separately included at the front of the
file. 0:00:54.000,0:01:04.000 The reason for doing this is to help ensure
the integrity of the audit conclusions and to
prevent hindsight from playing a role in prejudicing
the 0:01:04.000,0:01:11.066 audit conclusions. Different firms organize their files using varying formats, but they all
have the same logical consistency. 0:01:11.066,0:01:16.033 Files may be documented electronically or
in paper form. 0:01:16.033,0:01:21.033 Permanent files maintain information that
has pertinence from year to year. 0:01:21.033,0:01:27.033 Things like corporate bylaws, long term contracts, lending agreements, and systems documentations. 0:01:27.033,0:01:34.066 Current files maintain all the working papers supporting the current period. These files will include the risk assessments and materiality, 0:01:34.066,0:01:41.033 planning information such as staffing plans
and budgets, and the audit programs, audit evidence, and audit conclusions. 0:01:41.033,0:01:47.066 Working papers have the a logical flow to
them that needs to be well understood, not only
by a preparer, 0:01:47.066,0:01:55.033 but by those who come behind later including: The audit senior, manager, and the partner. 0:01:55.033,0:01:58.066 A second partner who may not have as much
or any familiarity with the client. 0:01:58.066,0:02:05.066 Office inspectors who have no familiarity
with the client, the file or the firms file preparation methodology. 0:02:05.066,0:02:13.033 And finally future junior auditors with limited experience who may be trying to follow along with your work new year. 0:02:13.033,0:02:17.000 In larger organizations, much of the working paper file is prepared by the client, 0:02:17.000,0:02:24.066 so the principles we talk about here are of
equal relevance for those who will ultimately work
in industry. 0:02:24.066,0:02:28.066 Whether you are a public accountant or working in industry, 0:02:28.066,0:02:36.000 the preparation of strong working paper files
is the key to achieving strong controls over financial reporting (if you are the client), 0:02:36.000,0:02:39.033 and the audit (if you are the public accountant). 0:02:39.033,0:02:43.033 Let’s take a moment to dive into the structure
of the current files. 0:02:43.033,0:02:49.066 Most firms have some sort of standard indexing system to organize the working paper file. 0:02:49.066,0:02:57.066 It allows for a logical drill down beginning
at the financial statements with each section of
the working paper referenced… 0:02:57.066,0:03:01.000 to the major sections of the balance sheet
and income statement. 0:03:01.000,0:03:03.066 The financial statements get vouched to the
trial balance. 0:03:03.066,0:03:07.000 The trial balance represents the ending balances in the general ledger. 0:03:07.000,0:03:14.033 The general ledger contains all the accounts
and the activity that has occurred throughout
the year. 0:03:14.033,0:03:21.000 The trial balance is often grouped, like accounts are aggregated first, and the subtotal carried forward to the financial statements. 0:03:21.000,0:03:28.066 For example, a company may have 5 bank accounts which get aggregated together and reported as one line, cash, 0:03:28.066,0:03:31.033 on the balance sheet. 0:03:31.033,0:03:36.000 Lead schedules are often the title page of
each section in the working paper file. 0:03:36.000,0:03:43.033 So for instance, for cash we would have a
lead schedule with our 5 general ledger accounts
that comprise cash. 0:03:43.033,0:03:48.066 Behind the lead schedules we would provide support for each account balance. 0:03:48.066,0:03:53.000 Support in this case would include a bank reconciliation for each account 0:03:53.000,0:03:56.066 Followed by a bank statement 0:03:56.066,0:03:59.000 Followed by a bank confirmation 0:03:59.000,0:04:02.066 On each working paper, you will document the audit procedures performed 0:04:02.066,0:04:10.033 You may initial a checklist either manually
or electronically on the audit program to signify performance of the procedure. 0:04:10.033,0:04:14.000 But you will also mark up the working papers using audit tick marks 0:04:14.000,0:04:20.066 Tick marks are simply a short hand notation
for documenting the work performed by the auditor 0:04:20.066,0:04:25.033 Whether its footing (or adding) a column of number 0:04:25.033,0:04:28.066 or checking the extensions of inventory costing, 0:04:28.066,0:04:34.033 the auditor makes little marks to show that they’ve been there and done that for those
who later review the file. 0:04:34.033,0:04:40.066 So the types working papers that are often
found in the current file include: 0:04:40.066,0:04:45.033 A detailed listing of what makes up the balance, such as an inventory listing or a receivables listing. 0:04:45.033,0:04:53.033 Reconciliations which agrees the balance in
the general ledger to the supporting evidence,
for example a bank reconciliation. 0:04:53.033,0:05:00.066 Continuity schedules that ties together opening and closing balances, such as the fixed asset schedule, 0:05:00.066,0:05:05.066 which tracks opening cost plus additions less disposals to arrive at the ending cost. 0:05:05.066,0:05:10.066 Tests of reasonableness, which are working papers that attempts to predict the balance
of an account 0:05:10.066,0:05:13.033 and then compares it to what has been recorded. 0:05:13.033,0:05:20.000 Procedure summaries would document the results of any testing performed, either substantive tests or tests of controls. 0:05:20.000,0:05:26.033 These sorts of working papers don’t actually have a subtotal or tie to a particular balance 0:05:26.033,0:05:31.000 because their purpose is to document the results of the sampling that has been performed. 0:05:31.000,0:05:39.066 Referencing is an extremely important practice that helps readers make their way through
the working paper file. 0:05:39.066,0:05:44.066 A reader should be able to start at the financial statements and drill into each and every number to determine 0:05:44.066,0:05:47.066 what it is composed of and what evidence has been gathered to support it. 0:05:47.066,0:05:53.000 Similarly, referencing also needs to enable
a reader to start with evidence 0:05:53.000,0:05:58.033 and trace its inclusion through the working papers to the financial statements. 0:05:58.033,0:06:02.066 Other items that get documented on the working paper include: 0:06:02.066,0:06:09.000 Proper headers that identify the client’s
name, the period covered, a description of the contents, the initials of the preparer, 0:06:09.000,0:06:13.033 the date of preparation, and a legend for
any tick marks that were used. 0:06:13.033,0:06:19.033 Whenever possible, the auditor should document conclusions about the segment under audit consideration. 0:06:19.033,0:06:24.000 Such conclusions are like mini-judgements about the application of each audit procedure. 0:06:24.000,0:06:30.066 These conclusion should plainly state whether the balance as presented is fairly stated. 0:06:30.066,0:06:35.033 This is a personal opinion and very important
for the overall integrity of the file. 0:06:35.033,0:06:40.000 Auditors will often import the client’s
trial balance into their own software. 0:06:40.000,0:06:47.066 Audit software tracks the balances from year
to year to more efficiently automate the analytical review procedures 0:06:47.066,0:06:52.033 It also enables the auditors to make adjusting journal entries as necessary when they come across errors. 0:06:52.033,0:06:59.066 If the errors identified are material, they
may ask the client to also make the adjustment. 0:06:59.066,0:07:06.033 Reclassification entries are also common. A reclassification entry is necessary, even
when the general ledger is correct. 0:07:06.033,0:07:10.000 For example, it’s not uncommon to have credit balances in the accounts receivable. 0:07:10.000,0:07:19.000 If these credit balances are material, the
auditor will often reclassify the amount to accounts payable for presentation purposes only. 0:07:19.000,0:07:26.033 Working papers are the property of the auditor, even if they are a copy of the client prepared working papers. 0:07:26.033,0:07:30.066 However, the client owns the data contained
on the working papers. 0:07:30.066,0:07:37.033 As such, the auditor has confidentiality obligations to protect the privacy of the information contained within these files. 0:07:37.033,0:07:43.000 The working papers can only be shared with another party with the express written consent of the client. 0:07:43.000,0:07:52.033 The tendency for inexperienced preparers is
to put a lot of support, some of it unnecessary
or irrelevant, in the current files. 0:07:52.033,0:07:57.066 More paper or larger electronic files don’t necessarily mean a better file. 0:07:57.066,0:08:04.033 In fact, the objective is to put the right
evidence in the file and communicate the work performed as efficiently as possible, 0:08:04.033,0:08:06.000 without sacrificing the any sufficiency. 0:08:06.000,0:08:12.000 The thicker the audit file is, the more challenging it is for reviewers to really stand back 0:08:12.000,0:08:16.033 and evaluate the key pieces of audit evidence. 0:08:16.033,0:08:20.066 As I said at the outset, in my years subsequent to working in public practice, 0:08:20.066,0:08:25.000 I have continued to use these professional documentation skills to support the financial reporting process. 0:08:25.000,0:08:32.033 It’s just as important that you do the little documentation things we have talked about
well, 0:08:32.033,0:08:36.033 as it is the all the testing you perform to
gather the audit evidence in the first place. 0:08:36.033,0:08:41.000 Think of this lesson as communication skills
for auditors. 0:08:41.000,0:08:45.000 Until next time, Don’t stop until you get
to the top and when you get to the top, don’t stop.

🔴 Facebook’s New Business Model – Libra (w/Jalak Jobanputra)


So talking about tokenization taking hold What are your thoughts on? Facebook’s new Crypto point I don’t even know if it’s fair to call it a crypto coin because it isn’t completely decentralized in many ways There’s still a lot of details to be determined here on What? What is decentralized what’s centralized what we do know as of now is that they’ve gotten a consortium of partners together? Which includes some of their advertising partners companies like Spotify? companies from the financial services sector like PayPal Visa MasterCard, which are very Interesting because you could argue that they’re competitors for payments mindshare and usage But they’ve gathered together a group of companies – I believe make it look and appear to be not so centralized that they’re actually creating a new entity that all these Consortium members will participate in and kind of govern this new Currency this this Libra coin as they’re calling it as of now and so Facebook will be just one of the nodes and that in that network and eventually I believe they want to get to a hundred members In this network, they’ve all put in ten million dollars committed – ten million dollars apiece There are also some nonprofit partners such as Women’s World banking So they’re very much looking to make this appear to be a really global effort focused on kind of banking the the 1.7 billion people around the world that are currently unbanked What I find it really interesting about this too is if you look at Facebook’s Financials only 10% of their users come from the United States 70% are in the emerging markets and developing markets however, most of their revenue almost a hundred percent of their revenue comes from advertising and its Advertising from those in the developed markets so they’re under a lot of pressure if they want to keep growing to figure out a new business model and We’re seeing companies around the world Want to get into the banking sector I’ve been investing in FinTech before it was confident acumen in the mid 90s late 90s and Controlling that spend or being able to participate in some of the fees is I think what they’re looking at as their next business Model it’s very early days. It’s going to take a long time to transition over to that But I think that’s very much what they’re going for So Facebook has been facing a lot of scrutiny because of its data collection and also the amount of information that has on users and also Potentially the lack of regulation that it faces right now Do you think them getting into this space? Without they’re able to do it because they’re not becoming a bank in a way Do you think that actually puts a lot more pressure on them in some way or more scrutiny? Well, I think the way they structured this shows that they’re very aware of the potential scrutiny Around this and and why they focused on on putting together this separate entity in Switzerland Which is a more neutral place. They’re also have more crypto friendly regulations in switzerland That’s where ethereum was was first launched under a foundation model, which is what facebook is following And so this is basically an LLC that they created both an LLC and the plan is to create a foundation the Libre Foundation where all of these consortium members will be members of that foundation. They’ve also created a separate LLC Which is going to actually run one of the nodes in in this foundation And they’re actually going to create the wallet that the Facebook users Will interact with so if I want to send money through my messenger app, I could do it through a third-party Blockchain crypto wallet or I can do it through Facebook’s wallets. So that’s where they’re going to start collecting Information on on their users and go through the standard Kyc process that banks actually require. I’m curious to find out what you think This is going to do for the crypto space Then also what this is going to do for the US dollar in the sense that is this actually more of a competitor Against the dollar than it is. Let’s say against Bitcoin well, I view all kryptos as Eventually taking some mindshare away from fiat I’ve never been one of those people who believes that you know bitcoin is going to take over the world, but if you give people alternatives in terms of Transacting and and this could be government’s or it could be the individual There’s going to be less reliance on the US dollar. So you’re already seeing countries look at issuing their own Sovereign digital currency you’re starting to see trade regions Exploring that and a lot of it I think is motivated by decreasing reliance on any one currency or any one standard and right now it’s really the US dollar and So so I do believe any alternatives in terms of payments are potentially a threat to fiat currency in general I mean we’re moving towards cashless societies all over the world if we look at what happened in China with with WeChat China had the most unbanked people in the world. Most of these unbanked are In in in the developing markets you look at India and Africa Those countries have the youngest populations the most people that are going to enter into the global GDP And and they don’t have banks the way we know them. They don’t have credit cards so this is a prime time if you look at the macro perspective and if you care about GDP growth their needs there need to be alternatives to the institution’s we built in the twentieth century I don’t think they’re going away, but there’s going to be more competition Do you see this potentially getting people more into other crypto currencies or do you see this is a kind of walled off situation Well, I think the fact that I looked at my LinkedIn Feed and there were so many people talking about it who have not commented on cryptocurrency or blockchain before I? think it’s really captured the attention of people who Than in the space and I think that’s a good thing at the end of the day Facebook has over two and a half billion users around the world 70% of them are in these emerging markets right for crypto and and blockchain Technology to realize its full potential We we need to have broader awareness a better user interfaces right now It’s so challenging to go out and buy I mean bitcoins a little bit easier but if it’s still if you want to buy other Kryptos You have to go through a long process if you want to hold your own keys and and control your Crypto currencies it it’s you have to remember a long seed phrase and so I Very much as we’re in 1995 internet and I was lucky enough to be Involved in those early days. And and so the parallels are very obvious to me and we didn’t have the e-commerce You know secured secure ways of buying things online We didn’t have the broadband connectivity that we have now We didn’t have the mobile connectivity which has brought all these billions more people online around the world and and so we’re kind of in that phase with with crypto and I Can’t think of a better way to kick-start awareness Around what cryptocurrency is and even if this is just a derivative or one form of it? Making people more aware of what this technology can do. It can create faster payments rails more seamless transfers You can program it in a way that you know Facebook could offer discounts on advertising to thier partners and there’s so many new business models that can be created out of crypto and blockchain technology And I don’t think we’ve even started tapping into near the potential because we’re not seeing that usage yet. Do you see any? Potential risks from Facebook getting into this space is there Fallout of maybe they don’t do it right And there is a lot of scrutiny and then that maybe pushes people to stay away from other crypto currencies for a while That that’s quite possible. I think we already are a little bit skeptical about Facebook in the way. They handle user privacy and and data and and so I take a contrary and approach to this where I want to see them try this and and and gonna Have people ask those questions about privacy about their writing their own smart contract language Why are they doing that? Well, how’s the governance going to work on validating the transactions? How are the partners? What data are the partners going to see if any? with Facebook’s own wallet if people are using that to transact what data will Facebook actually control they’ve said they’ll allow opt Or or it will be an opt-in structure Which is very much against what they’ve done before which is you have to opt out. Most people don’t opt out of things because They don’t read the privacy So I hope people kind of hold them to what they’re saying and and and take a look under the hood as we get more and more details around all these pieces But I think it can educate a broader swath of the population on What this can do and and and we will have discussions on privacy around all of this Do you envision a future where different companies have their own coins? We have a soft Bank coin and a Twitter Queen and different things or do you see it as being a very limited space? for companies to get into this area Well, I mean in some ways we we’ve had coins in the form of like loyalty points and you know It’s just we haven’t really been able to use them out outside of a company’s four walls, man And what will be very interesting to see with with this Facebook announcement is how are their partners going to get engaged? so they’ve said you can potentially use the these Libra coins at a retailer or You know on another site and so it’s that Interoperable piece and and then how are you going to get? How you’re going to cash out on that if you want to cash out on fiat And and so I I think this consortium idea and getting some of these folks involved it’s it’s the first time we’re also seeing something go beyond just the the four walls of a company and And see what they can do with partners. I I think we’re still in very early days there But there’s a lot of potential. I just hope they’re able to execute You

How Do You Legally Set Up a Business?


Have you been considering pulling the trigger
on that million-dollar business idea? You’ve got a killer product and genius marketing
plan. But what about the finances, legal, and tax
stuff? LLC’s, Partnerships, DBA’s, S Corp…ahhh!! The sad truth is, too many people put off
implementing a good idea in the proper way because they’re intimidated. But fear not — we’ve got you covered. And it’s probably not as complicated or
as costly as you might think. So let’s get our Business Building Blocks
out and see what goes into building a business the right way. The first step is to put on your CFO hat and
get to work setting up your finances correctly. Do you need to set up a business bank account? Or is a personal checking okay if you’re
just starting out? Experts agree that the most important thing
is to separate your business money from your personal money. Completely. No leaks! It will help you avoid bookkeeping and tax
headaches before they start. And when you’re just starting out, using
a separate personal checking account can be fine, but eventually, upgrading to a BUSINESS
checking account can offer special benefits — like additional protection of your personal
assets if things go south. All your initial set up costs like a website
or logo-design should come from this account and not your personal one. It will also eventually be the destination
for income once those benjamins start rolling in. Now it’s time to decide on a legal structure. If your business is on the smaller side, you’ve
got some simpler options, like the Sole Proprietorship. A “sole proprietor” business has one owner,
you, and is not a separate entity under the law. If this is your choice, you won’t have to
file anything with the government to get started But you may be personally held responsible
for any debts the business might incur. And come tax time, all the profit or loss
from that business will run through your personal tax return. You can operate the business under your own
personal name, or you can choose to use a DBA or “doing business as”. For instance, when I had a professional organizing
business, I wanted my clients to be able to make checks out to “Swiss Miss Organizing,”
rather than my name. It just felt more professional. But before I could get a business account
called “Swiss Miss Organizing,” I had to file a DBA for that name. This is done at the county level, and most
counties allow for a pretty easy online filing process. There will most likely be filing fees, but
it’s usually under a hundred bucks. If you decide to share ownership of a business
with at least one other person, then you’ll need to form a partnership. It might be worth it to hire a small business
attorney to help you draft up an agreement. The money you spend will be WELL worth it
to have clarity of ownership and operating agreements. Small business partnerships implode all the
time due to vague or non-existant contracting. Partnerships require not only a DBA but also
an Electronic Identification Number, easily obtained from the IRS website. This acts like a social security number for
your business and will allow you to file a tax return for the business itself. BUT the business doesn’t pay income tax. Instead, it “passes through” any profits or
losses to its partners, meaning the partners are personally on the hook for any taxes…
or legal troubles. If that sounds scary, you might want to consider
a Limited Liability Company. The LLC shields the partners from most legal
responsibility and protects their personal assets should a client sue the business for
some reason. Putting an LLC in place can cost a few hundred
to a few thousand dollars, depending on your state and whether you hire a professional
to help you. That can increase the cost a bit, but it’s
better than finding out too late that you’re not protected because it was improperly set
up. Keep in mind that the advantages here are
for legal protection only. LLC’s don’t change how the partners are
taxed. For that, you need to go one more step up:
a corporation. The most common type for small business owners
is the Subchapter S-Corporation. Unlike all the other arrangements we’ve
talked about, an S-Corp is considered by the government to be its own discrete entity,
both for legal AND tax-related purposes. Instead of just absorbing the profits (or
losses), your business now PAYS YOU as an employee and/or owner. And because this income is taxed at a different
rate, it can mean some real savings. But there are costs associated with filing
for an S-Corp, and they can get pretty hefty. There’s filing charges, an additional tax
return you’ll have to get prepared, and likely ongoing charges for a payroll service. It all may be worth it for the tax saving
you get… or not. To know for sure, you should speak with a
tax specialist… which brings us to our final building block! Get some experts in your corner. Any small business owner will tell you that
when it comes to laws and taxes, one simple mistake can lead to massive headaches down
the road. Selecting the right business entity is just
one of the many critical decisions they can help you with. When you’re just starting out, we really
recommend building a relationship with a good CPA, bookkeeper, and small business attorney. It’s their job to help you make smart decisions…
while still playing by the rules. Building a small business might feel daunting
at first. But if you take your time, do your research,
and set things up right from day one, you’ll be reaching your dreams before you know it. And that’s our two cents! Sound Field is a new music education show from PBS Digital Studios that explores the music theory, production, history and culture behind our favorite songs and musical styles. Pop, classical, rap, jazz, electronic, folk, country and more… Sound Field covers it all. Hosted by two supremely talented musicians: Arthur “LA” Buckner and Nahre Sol. Every episode is one part video essay, and one part musical performance. So go subscribe to Sound Field! Link in the description below If you’ve ever formed a Partnership, LLC or S-Corp, tell us about your experience in the comments.

Living in Frankfurt. Working for the ECB


Frankfurt is a place that works.
The landscape of the city is changing all the time, and new areas are being developed,
new buildings are going up, new parts of the city are becoming interesting. It’s actually
a place where is really easy to have a very high quality of life.
Frankfurt people are really friendly, they do a lot of jogging, a lot of healthy activities
in the weekends or during lunch time. I enjoy running down the river at lunch time
for an hour, it’s a nice way to refresh. It’s not just the jogging on the Main but
jogging in general that helped me discover half the city.
Frankfurt is kind of small, but it’s also big in terms of reputation, and infrastructure.
It’s a good place to live. There’s no forty minutes commute on the
U-Bahn every day, you know, it’s a ten minutes’ walk. It’s possible to live right in the
centre of town, you can be walking along the river in seconds, you can be in a park in
seconds, and actually with the airport you can be somewhere else in hours as well. It
also a city that increasingly provide more and more of the things that make bigger cities
exciting, like the bars, like the music scene, like the Opera.
After work usually they get off for a drink or socializing somewhere…lots of pubs, lots
of places to go out, shopping, you name it. I still find time to go the Opera, there is
an excellent concert hall here. I never go alone, I go with friends. It relaxes me, it’s
something that we do together and it connects us. I could not focus and give my outmost at work if I didn’t know that my family was behind
me. The children themselves learn to live in a multicultural environment from very early
on. There is a lot of support, there are a lot of very good institutions, places, schools.
And so it is second nature to live in a multicultural environment. And not only languages but also
respect for other cultures, respect for other traditions.
It’s very international, and people are welcoming towards foreigners.
It’s a place that lends itself to very easy, and very high quality of life.
The public transportation works, the streets are clean, it just works, it’s easy.

Scott Pape’s start your working life money challenge


Scott Pape: Welcome to the Barefoot Investor’s
60, 60, 6 challenges. Helping you get more money smart by the minute. Part of becoming a wage-earner is taking control of your money. Do it now and you’ll have this ritual for life
and you’ll be able to use it to build real wealth. This challenge takes one call. Phone your pay office
and ask them to give you all your employment details. You need to know how much you’re pulling in
each payday, how much is going to super and whether you’ve started to pay back any
higher education debt that you might have. Now, you might also find some of this info on your payslip. Now, you don’t need to start paying back your
higher education debt until you earn just over 50-grand per year, but you do need to declare to
the tax office that you have a HECS-HELP debt. This is usually done on your tax file number
declaration form when you start a new job. You can’t really understand your finances unless you
devote a bit of time each week to keeping them in order. But who said it had to be hard? Just do what I do: First, I want you to find an empty shoebox. Next, buy a packet of bickies or whatever treat takes your fancy. Then, put all your bills for the week in the shoebox. Okay now I want you to put the kettle on,
and make yourself a cuppa and go through your bills. Pay the bills if possible, or work out exactly
when you’ll need to pay each one and put the payment date in your diary. If you do this little 60-minute ritual once a week,
at the same time each week, I guarantee you’ll not only get on top of doing your
weekly finances, you’ll even look forward to it. Now this may sound strange but for the first
part of the 6-day challenge I’d like you to go out to a restaurant with your partner or a mate. While you’re there, get a serviette and a pen and
draw a tap with three buckets under it. Label them ‘Blow’, ‘Mojo’ and ‘Grow’. That’s exactly what I did with my wife before we were married and it’s become famously known as my Serviette
Strategy. And now I’m going to share it with you. Okay, so how much you devote to each bucket will
vary depending on your situation but what’s important is setting all three up and giving something to each one each payday. Now, for most people, their Blow bucket is their one and
only money bucket – wages come in, money goes out and hopefully there is something left over
to put towards saving and long-term wealth. But there’s nothing systematic about it. Your Blow bucket is an everyday transaction account
I want you to use to pay expenses like bills, food and your mortgage or rent. But the problem is, it has a hole in it – every dollar that
you pour in ends up leaking out the bottom. That’s why you need the other two buckets. Now, your Mojo bucket is simply a high-interest online savings account. Work towards keeping your Mojo bucket stocked
with at least three months of living expenses or a quarter of your annual pay. The final one is the Grow bucket. Now the aim with
every dollar you pour into this bucket is to compound your money, hopefully doubling your dough every seven to ten years. Now, there are actually three parts to the Grow bucket –
superannuation, shares, and property investments. And if you can devote money to each of those
three things your wealth will grow safely and surely over your career. You can use MoneySmart’s budget
planner to help you work out your goals and how much to allocate to each bucket.