Greed Tops List Of Items Making News
July 28, 2016 at 4:25 p.m.
It was quite a busy week in the news business.
First, the WorldCom debacle.
I don't consider myself naive, but I really don't understand the level of greed under which some people operate.
Here we have a couple guys willing to risk global economic collapse just to line their pockets with a few extra million bucks.
And they already had a few extra million bucks to begin with.
Really, what were these guys thinking? You don't have to be an accounting genius to figure this one out.
They were listing operating expenses as capital expenses. Capital expenses aren't reflected in earnings.
About $3 billion worth of expenses in 2001 and another $797 million in the first quarter of this year were wrongly listed.
Basically, this means that while the company was reporting profits, it probably was really losing millions of dollars. The financial guys in WorldCom were trying to dupe the board of directors and the markets.
It's as if their greed overrode their common sense. How did they think they could get away with that? It's crazy.
And the net effect of their actions?
A ripple through the markets that will cost investors millions.
You don't even have to own WorldCom stock, which is basically worthless now.
You don't even have to own telecommunications stock, virtually all of which is taking a big hit.
All you have to do is be in the market, because when a big outfit like WorldCom goes belly up, fund managers scramble to keep their clients' portfolios in good shape.
They sell off telecommunications stock. They take profits from stock in other sectors by selling. The markets drop.
Everybody loses.
Sure, if you stay in, you can recoup those losses over time, but there is no doubt about the negative effect these few greedy individuals had on the 401Ks of millions of Americans.
They deserve to be locked up.
Martha Stewart might need to be locked up too. She's under investigation for insider trading.
The SEC wants to know whether Stewart lied to prosecutors when she told them why she sold 4,000 shares of ImClone a day before the Food and Drug Administration announced it wouldn't consider an ImClone experimental cancer drug.
Stewart just happens to be a friend of former ImClone CEO Sam Waksal. Waksal was arrested two weeks ago on charges of insider trading for allegedly trying to sell his stock and tipping off family members about the impending FDA decision.
Of course Stewart, the decorating mogul of the free world, is innocent until proven guilty. But it doesn't look good, does it?
Greedy, greedy, greedy.
And then amidst all the wanton greed and business corruption in the news this week we have the 9th Circuit Federal Court of Appeals ruling that gets to the heart of what's really wrong with America.
That, of course, is the recitation of the Pledge of Allegiance in schools.
That, you see, we have to outlaw.
The ruling by the wacky 9th Circuit is probably one of the most bizarre and stupid acts of jurisprudence in the history of mankind.
The 9th Circuit, headquartered in San Francisco, has long been knows for its looney rulings. No other federal court has more rulings overturned. No other federal court is as liberal. If these guys took a step to the left, they'd fall off the planet.
Even Diane Feinstein, the Democrat Senator from California, rose to the Senate floor to denounce the ruling. The Senate voted 99-0 to denounce the ruling. (One of them was in the hospital.)
The good news is that either the full 9th Circuit or the Supreme Court will almost certainly overturn the ruling.
But for now, the law of the 9th Circuit is that you cannot say the Pledge of Allegiance in a school.
I suppose one could stretch the establishment clause - "Congress shall make no law respecting an establishment of religion or prohibit the free exercise thereof" - that far.
After all, Congress did add the words "under God" to the pledge in 1954. Perhaps the honorable judges on the 9th Circuit consider that an establishment of religion.
Perhaps they have found a technicality. But so what?
The ruling is still idiocy. Where's the harm. What, exactly, are we remedying? After all, kids have been saying the pledge with "under God" for almost 50 years. As far as I can see, there have been no ill effects.
But you better watch out. Talk like that is dangerous.
One day you've got kids saying God in school, the next day you have legions of right-wing, ultra-conservative zealots trampling your inalienable right to debauchery.
My, how enlightened a culture we now have become.
On the one hand, if you try to filter out pornography on the library computer, people scream about unconstitutional censorship.
On the other hand, if you say the words "under God" in a school, it needs to be constitutionally censored.
I think Wawasee Schools Superintendent Mark Stock pretty well summed up the sheer lunacy of the ruling when he asked our reporter, "Do we go one step further and say it's illegal for schoolchildren to use money for lunch because (the money) says 'In God We Trust'?"
But following the goofiness from the 9th Circuit came a glimmer of hope from the U.S. Supreme Court.
The high court ruled that Ohio's school voucher program was constitutional.
The program provides parents a tax-supported education stipend. Parents can use the money to pull their kids out of failing public schools and put them in private schools.
The high court reasoned that vouchers don't amount to government-sponsored religion because the the stipend is given to parents. The parents then choose where to spend it - not the government.
Parents could choose religious schools, secular private academies, suburban public schools or charter schools run by parents or others outside the education establishment.
'We believe that the program challenged here is a program of true private choice,' Chief Justice William H. Rehnquist wrote for the majority.
But more than 96 percent of the money in the Ohio test case went to religious schools, prompting Justice David Souter to write, 'There is, in any case, no way to interpret the 96.6 percent of current voucher money going to religious schools as reflecting a free and genuine choice by the families that apply for vouchers" for the dissenters.
I guess my view is that if we turn out smarter students, it's all good.
And they might be a little less greedy, too.
*****
CORRECTION:
I was harping on the inheritance tax in last week's column and gave an example using a $675,000 exemption. I wrote that the exemption would increase to $1 million by 2005. That was outdated information. The exemption was raised to $1 million this year and will increase to $3.5 million by 2009.
Thanks to Pierceton CPA Dana Krull for pointing out the error. [[In-content Ad]]
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It was quite a busy week in the news business.
First, the WorldCom debacle.
I don't consider myself naive, but I really don't understand the level of greed under which some people operate.
Here we have a couple guys willing to risk global economic collapse just to line their pockets with a few extra million bucks.
And they already had a few extra million bucks to begin with.
Really, what were these guys thinking? You don't have to be an accounting genius to figure this one out.
They were listing operating expenses as capital expenses. Capital expenses aren't reflected in earnings.
About $3 billion worth of expenses in 2001 and another $797 million in the first quarter of this year were wrongly listed.
Basically, this means that while the company was reporting profits, it probably was really losing millions of dollars. The financial guys in WorldCom were trying to dupe the board of directors and the markets.
It's as if their greed overrode their common sense. How did they think they could get away with that? It's crazy.
And the net effect of their actions?
A ripple through the markets that will cost investors millions.
You don't even have to own WorldCom stock, which is basically worthless now.
You don't even have to own telecommunications stock, virtually all of which is taking a big hit.
All you have to do is be in the market, because when a big outfit like WorldCom goes belly up, fund managers scramble to keep their clients' portfolios in good shape.
They sell off telecommunications stock. They take profits from stock in other sectors by selling. The markets drop.
Everybody loses.
Sure, if you stay in, you can recoup those losses over time, but there is no doubt about the negative effect these few greedy individuals had on the 401Ks of millions of Americans.
They deserve to be locked up.
Martha Stewart might need to be locked up too. She's under investigation for insider trading.
The SEC wants to know whether Stewart lied to prosecutors when she told them why she sold 4,000 shares of ImClone a day before the Food and Drug Administration announced it wouldn't consider an ImClone experimental cancer drug.
Stewart just happens to be a friend of former ImClone CEO Sam Waksal. Waksal was arrested two weeks ago on charges of insider trading for allegedly trying to sell his stock and tipping off family members about the impending FDA decision.
Of course Stewart, the decorating mogul of the free world, is innocent until proven guilty. But it doesn't look good, does it?
Greedy, greedy, greedy.
And then amidst all the wanton greed and business corruption in the news this week we have the 9th Circuit Federal Court of Appeals ruling that gets to the heart of what's really wrong with America.
That, of course, is the recitation of the Pledge of Allegiance in schools.
That, you see, we have to outlaw.
The ruling by the wacky 9th Circuit is probably one of the most bizarre and stupid acts of jurisprudence in the history of mankind.
The 9th Circuit, headquartered in San Francisco, has long been knows for its looney rulings. No other federal court has more rulings overturned. No other federal court is as liberal. If these guys took a step to the left, they'd fall off the planet.
Even Diane Feinstein, the Democrat Senator from California, rose to the Senate floor to denounce the ruling. The Senate voted 99-0 to denounce the ruling. (One of them was in the hospital.)
The good news is that either the full 9th Circuit or the Supreme Court will almost certainly overturn the ruling.
But for now, the law of the 9th Circuit is that you cannot say the Pledge of Allegiance in a school.
I suppose one could stretch the establishment clause - "Congress shall make no law respecting an establishment of religion or prohibit the free exercise thereof" - that far.
After all, Congress did add the words "under God" to the pledge in 1954. Perhaps the honorable judges on the 9th Circuit consider that an establishment of religion.
Perhaps they have found a technicality. But so what?
The ruling is still idiocy. Where's the harm. What, exactly, are we remedying? After all, kids have been saying the pledge with "under God" for almost 50 years. As far as I can see, there have been no ill effects.
But you better watch out. Talk like that is dangerous.
One day you've got kids saying God in school, the next day you have legions of right-wing, ultra-conservative zealots trampling your inalienable right to debauchery.
My, how enlightened a culture we now have become.
On the one hand, if you try to filter out pornography on the library computer, people scream about unconstitutional censorship.
On the other hand, if you say the words "under God" in a school, it needs to be constitutionally censored.
I think Wawasee Schools Superintendent Mark Stock pretty well summed up the sheer lunacy of the ruling when he asked our reporter, "Do we go one step further and say it's illegal for schoolchildren to use money for lunch because (the money) says 'In God We Trust'?"
But following the goofiness from the 9th Circuit came a glimmer of hope from the U.S. Supreme Court.
The high court ruled that Ohio's school voucher program was constitutional.
The program provides parents a tax-supported education stipend. Parents can use the money to pull their kids out of failing public schools and put them in private schools.
The high court reasoned that vouchers don't amount to government-sponsored religion because the the stipend is given to parents. The parents then choose where to spend it - not the government.
Parents could choose religious schools, secular private academies, suburban public schools or charter schools run by parents or others outside the education establishment.
'We believe that the program challenged here is a program of true private choice,' Chief Justice William H. Rehnquist wrote for the majority.
But more than 96 percent of the money in the Ohio test case went to religious schools, prompting Justice David Souter to write, 'There is, in any case, no way to interpret the 96.6 percent of current voucher money going to religious schools as reflecting a free and genuine choice by the families that apply for vouchers" for the dissenters.
I guess my view is that if we turn out smarter students, it's all good.
And they might be a little less greedy, too.
*****
CORRECTION:
I was harping on the inheritance tax in last week's column and gave an example using a $675,000 exemption. I wrote that the exemption would increase to $1 million by 2005. That was outdated information. The exemption was raised to $1 million this year and will increase to $3.5 million by 2009.
Thanks to Pierceton CPA Dana Krull for pointing out the error. [[In-content Ad]]