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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (835)	9/30/1998 2:32:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

<< you can't get [the Austrian School] from the articles I post on occasion. Those are written for laypeople. >> I find that the more I write about ideas, the better my own grasp of them. Think of it this way: If you can explain it to me, anyone can understand it.

To: Freedom Fighter who wrote (835)	9/30/1998 3:04:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

It is historical nonsense that we did nothing early on until FDR came along. (albeit universally believed) Hoover despite his reputation was very active in trying to prop up the excesses. It is documented. It is well documented that Hoover made great humanitarian efforts. I suspect that giving Roosevelt credit for getting us out of the depression was one part political revisionist history and one part lack of understanding of the facts. The credit facts vs. GDP are not refutable though. I have them in a chart. Statistical coincidence is not irrefutable proof of anything in the social sciences -- because there is no way to re-run history changing only one variable. Therefore, there are no controlled experiments, and hence, nothing approaching proof. Only the most partisan advocates of intervention credit Roosevelt with ending the Great Depression. Anyone who lived through it knows it was WWII. But just letting the system collapse was a prescription for being taken over by the Communists or their Fascist imitators. It is argued by some that government disaster relief encourages people to take unnecessary risks the next time around. But, the political reality is that a government that doesn't provide disaster relief will get replaced by one that "promises" that it will. Often, the replacement government winds up being the biggest disaster of all. Btw, one of the things mentioned in traditional economics texts is that post-war growth in Germany and Japan was so much higher than other countries because the devastation had eliminated all of the marginal performers in the labor and capital markets. But, even economists concede that that's too high a price to pay for increased economic efficiency.

To: Freedom Fighter who wrote (835)	9/30/1998 7:40:00 PM
From: porcupine --''''>	Respond to of 1722

MCI Worldcom to Cut Write-Off on Acquision to $3.1 Billion September 30, 1998 By DAVID J. MORROW MCI Worldcom Inc. plans to write off $3.1 billion of Worldcom's $37 billion purchase price of MCI Communications as research and development costs -- half of what the company estimated last month. The lower charge, which was disclosed in a filing with the Securities and Exchange Commission on Tuesday, comes amid increasingly sharp criticism of such write-offs and other corporate accounting practices that the SEC finds abusive. The commission, for example, blocked for nearly two months the release of America Online's earnings after the company sought to write off $316 million related to research at two companies it acquired. On Monday, after reaching an agreement with the commission, America Online reported earnings that included a sharply lower write-off of $70.5 million. On Tuesday, MCI Worldcom, the merged company that took effect on Sept. 14, acknowledged that its lower estimate came in part from the commission's new scrutiny into companies taking large write-offs for research and development to avoid a long-term drag on assets. At issue is what is known as in-process research and development, or research that has yet to be turned into a marketable product. Many technology companies have argued that most of the price they pay for acquisitions represents such continuing research. Such accounting has long been a loophole for many savvy merger and acquisition bankers. In an acquisition, companies estimate the value of the assets they are buying. If the purchase price is higher than the value of the assets, the remainder becomes part of good will. The acquiring company must then write off the value of these assets included as good will over a period of three to 40 years. The one exception is continuing research, which is written off immediately. A higher charge for in-process research and development could significantly reduce the good will amount. "The SEC's new guidelines didn't come into effect until September," Gary Brandt, vice president of investor relations at MCI Worldcom, said Tuesday. "They did come in and take a look, but that doesn't impact the expectations of the overall numbers." MCI Worldcom will take the $3.1 billion charge immediately, according to the SEC filing. That will result in $26 billion being recorded as good will, which will be amortized over 40 years. When Worldcom, the United States' fourth-biggest long-distance company and a large Internet backbone provider, acquired MCI, the second-biggest long-distance company, it created a company with revenue of more than $30 billion and operations in 65 countries. The filing was disclosed after the stock market closed. Earlier, shares of MCI Worldcom rose 68.75 cents, to $50.5625, in Nasdaq trading. Analysts said they were not concerned about the accounting change. "The SEC has new guidelines for accounting in acquisitions; Worldcom is just conforming to these guidelines," said Eric Strumingher, a telecommunications analyst with Paine Webber. "The impact to MCI Worldcom's cash flow because of this change in the one-time charge is zero." But he said the move could reduce earnings estimates for 1999 by 3 cents a share. "Instead of amortizing $600 million in good will from the deal on their income statement, they will now be amortizing $650 million," he said. Copyright 1998 The New York Times Company