Hi David,
I had sort of glossed over the "www.themarker.com" article the first time but I'm grateful that you induced me to take another look. The crux of the matter, as far as options are concerned, is the blatant lie that is allowed to be told by the IRS tax code. That lie is that "options aren't an expense". This illogic in the tax code is part and parcel of a couple of decades of tax law modification not based on "physics" as Doron Tsur would call it, or logic as I might, but rather it is based upon the willful rigging of the system to favor the elites. Paid for by them to obligingly corrupted public officials.
The problem that we face, is that if options were to be treated as an ordinary expense to corporations, a very large percentage of the supposed value of the NASDAQ market would be wiped out. DELL is a good example, as you indicate. And MSFT would, according to some, be worth about $20 per share, were their compensation system be brought back in line with traditional accounting methods.
We've created a huge monster of chicanery and deception and now that the investing public is getting wise to the fact that they've been played for chumps, it's going to be hard for the public markets to go back to the wink'n nod suspension of disbelief that gave us NAZ 5000.
I'm personally in favor of legislation being introduced by the Democrats.... Sarbanes, Dorgon and Feinstein et al to try to reign in the worst of Wall Street's excesses. But unless and until the US House elections occur and a revulsion with the Republicans changes the complexion of the House (an unlikely event), we are probably stuck with minor band-aid efforts to clear the market, such as the M/L settlement with NY AG Spitzer announced this morning. Truly a case of the brokerage houses doing the absolute minimum possible to clean up their act.
JM2C, Ray |
