Steven Levitt of Freakonomics, I hear you

$40 for 1.5 hours of Steven Levitt... definitely worth the money!

I will share a couple of stories he mentioned with such aplomb.

Firstly he discussed about a John Solagi, a tax officer with IRS many years ago. John is responsible for checking on tax relief claims. American taxpayers then only need to fill in the name of their children to get $300 relief for each child. John suggested to his supervisor to include the child's social security number (perhaps something like our I/C no.) when filing the tax return. His supervisor hesitated given the tedious bureaucratic process needed to amend the design of the form. After many years of hesitation, the idea was finally put in place. Almost overnight, 7 millions children somehow mysteriously disappeared from tax claims. Apparently, many American taxpayers have been cheating IRS with claims for non-existent children. At $300 per child, John's idea is valued at $2.1 billions a year!

Secondly, Steven said he idolises Alan Greenspan (the former Federal Reserve chairman) as every economist hopes to be a GREAT economist. An economist that is great is when their mistake would cause the financial crisis just like that of in 2007. (He is obviously taking a dig at Alan Greenspan.)

Thirdly, he was having a bit of fun about our casinos. He was told that Singapore citizens and PRs have to pay $100 to enter the casinos as part of Singapore govt's initiative to discourage gambling. He queried why the $100 when Singapore has been very effective in implementing capital punishments!! When he was told that the annual entry fee to casinos is $2,000/-, he remarked that it is certainly very strange for the govt to give a quantity discount for bulk purchase when the objective is to discourage gambling. He would be very interested to analyse the data on the people who actually put themselves on the "SELF EXCLUSION" scheme!!

Fourth story is on his two daughters playing "scissor, paper, stone". He observed that Amanda wins more than 66% of the duels with Anna. So as a curious economist seeking truth in an observed phenomenon, he went and asked Amanda on her formula for success. Amanda said she observed that Anna never repeat her "scissor/paper/stone". Steven then asked Anna for her side of story. Anna said she didn't know she can repeat.

Key remark - He has built his career as an economist and author of Freakonomics on the fundamental need for one to always think and to think differently. He urged all of us to give ourselves some time to think.

www.AccountingWithEdgar.com@2011

Shell says, "Force majeure". What is that?

There was a Fire at Shell's refinery. Refinery damaged and shut down. Shell thus unable to deliver supplies to its customers as per contract. Shell declares, "Force majeure".

It means "greater power" in French where contracting parties seek to walk away from a contract without liabilities due to the occurrence of an event beyond control of both parties.

Can a party unilaterally declare "force majeure"? When is an event beyond control of both parties?

In this case, Shell's customers obviously could not have started the fire or part of the fire fighting team. Thus beyond the event is beyond Shell's customers control.

Shell, the supplier, is possibly claiming that the fire was started by the "greater power" in a multi-billion complex built by human with the greater power of machinery and equipment on a man-made island. Yes for many hours, the fire was beyond control of the fire fighting team.

In conclusion, the FIRE is thus an event beyond the control of both contracting parties and also everybody else on earth.

While I am at it.. can i continue my blabering..  Did the water used to fight the fire also drained uncontrollably into the ocean surrounding Sentosa Cove etc? Can you also seriously believe that the toxidity level of air remained unchanged? Why didn't BP hide behind the term "force majeure" when its underwater pump leaked in the middle of Gulf of Mexico for days? By declaring force majeure, Shell can't claim from its insurers too, right?