DanKohn.com

If I were SEC Chairman Harvey Pitt, I would not be happy to wake up this morning hearing that John McCain had called for my resignation. Although I support this fully, I can’t see McCain’s argument that executives should only be allowed to sell stock 90 days after they quit their job. Basic financial prudence and portfolio theory would dictate that otherwise completely effective execs would quit rather than keep all of their eggs in one basket.

Also, I cannot understand the hullabaloo about expensing stock options. Like everyone else, I like Warren Buffett’s quote:

If options aren’t a form of compensation, what are they? If compensation isn’t an expense, what is it? And, if expenses shouldn’t go into the calculation of earnings, where in the world should they go?

The answer is that there is only one metric that ultimately matters to shareholders, and that’s earnings per share (EPS). The emphasis is on per share. Stock options increase the total number of shares outstanding and therefore reduce the fully diluted EPS. Now, I would certainly support regulations requiring that EPS always refer to fully diluted EPS, and that undiluted EPS be deprecated for the much less useful number that it is. Note that this is just what Bush suggested in an interview with the WSJ. However, I can’t see the argument that this approach “only accounts for the increase in shares outstanding, not the cost to the company of the stock options.” After all, the only cost to the company is the increase in shares outstanding. The trick is for investors to use the metric — fully diluted EPS — that takes this cost into account.

Great closing quote by McCain: “To love the free market is to loathe the scandalous behavior of those who have betrayed the values of openness that lie at the heart of a healthy and prosperous capitalist system.”

US CentCom lists support from allied countries in the current war. Is it just me, or does the phrasing here seem unnecessarily pejorative? “France provided its only Carrier Battle Group to support combat operations in the North Arabian Sea. Aircraft from this Battle Group have flown more than 2,000 hours for OEF to date, supporting the coalition with air reconnaissance, strike and AEW missions. France’s naval contribution to OEF accounts for approximately 24 percent of their entire naval forces.”

Hilbert’s paradox of the (aptly named) Grand Hotel: If an infinite number of rooms are filled, and an infinite number of coaches arrive, each with an infinite number of passengers, are there rooms for them?

Ever wonder what the USS in front of ship names on Star Trek stands for? Starship Enterprise from wikipedia explains: “The USS Enterprise was once referred to as the ‘United Space Ship Enterprise’, but ever since has always been ‘United Star Ship’. Since Starfleet is unrelated to the United States armed forces any similarity between this awkward phrase and the American warship prefix ‘United States Ship’ must be strictly coincidental.”

Dahlia Lithwick writes in Slate on the Supreme Court’s torturous justification of high-school urine tests in Board of Education of Pottawatomie County v. Earls

Thomas finally eviscerates the public safety requirement that once characterized all the “special needs” exceptions. Railroad workers and customs officers endangered the public with drug use. Students, Thomas says, endanger themselves. And that is enough for the court to approve the program. It’s enough to force every single American to also submit to suspicionless drug-testing, but Thomas neglects to mention this.

Having eviscerated the 4th ammendment, the Supreme Court will next get its shot at Habeas Corpus when the cases of Yaser Esam Hamdi and Jose Padilla eventually reach them (although it wouldn’t surprise me if they failed to grant cert).

A harrowing review of communications failures by the NY fire department on 9/11: “It’s a disgrace,” [one firefighter] said: “The police are talking to each other. It’s a no-brainer: Get us what they’re using. We send people to the moon, and you mean to tell me a firefighter can’t talk to a guy two floors above him?” I was a volunteer firefighter during college, but have no context to imagine rushing up the stairs of those towers.

The first chief on the scene could not keep contact with the firefighters he sent upstairs, including the company led by his brother, who did not survive. James Ellson, a former deputy in the city’s Office of Emergency Management, said recently: “On that day, Sept. 11, all the plans, all the scenarios that we had developed, everything, everything was blown up.”

Want to cure AIDS? Start with the lowly condom: “Granted, the condom is not glamorous or scientifically sophisticated. It doesn’t use the latest high-tech wrinkles or cost much. It is not the product of endless nights in a lonely lab. No, it is completely devoid of scientific drama. Still, it is the only approach that has been shown to slow the spread of sexually transmitted AIDS.”

John Gilmore writes on Intel selling out your rights to the Hollywood oligopoly:

What really saddens me is that Intel has no need to buy off that oligopoly. In fact it’s quite the opposite. Intel’s efforts to suck up to that oligopoly have CREATED the perception among policy makers that “something needs to be done”, since Intel and the oligopoly “agree on the problem”. Intel and other honest manufacturers should stand fast and say, “We are not the world’s policemen. We sell general purpose equipment and we make it as flexible as possible to attract the broadest range of customers. You can’t hold the man who makes pencils responsible because a bookie used a pencil to write down a bet. And you can’t demand that he design a pencil that can’t be used to write down a bet.” If you answered the oligopoly demands in those terms, there would be no political “problem”. And you would have good Supreme Court law behind you — the Betamax case.

Instead, you are working to undermine the Betamax case, the competitiveness of your own industry, the interests of your own customers, and the foundations of your own free society.

Sony v. Universal Studios Decision (1984) is universally known as the Betamax case. Here is a summary. Digital Consumer is a great advocacy site on the issue.