Interestingly, markets aren't freaking out and Microsoft's stock isn't tanking. That's because investors seem happy to accept Microsoft's view that this is basically all just a matter of accounting gimmicks ("the previously announced non-cash, non-tax-deductible income statement charge of $6.19 billion for the impairment of goodwill and the deferral of $540 million of revenue related to the Windows Upgrade Offer") and the company offered a parallel non-GAAP earnings measure showing very solid 7% revenue increase and 12% operating income increase.
I'm not actually sure how reassuring I would find any of that. If you look at the statement, the basic structure of Microsoft continues to be that it has highly profitable franchises selling Windows and Office and enterprise server software yoked to a staggeringly unsuccessful online services division.
This is no surprise. Especially in the high-tech world, investors have long since concluded that official GAAP earnings are indeed basically a collection of accounting gimmicks and that a simpler look at earnings probably provides a better snapshot of a company's health. So they're happily accepting Microsoft's view because it's the view that's been conventional wisdom for a long time.
The second paragraph is more interesting, and it's the real reason no one freaked out over this news: the market gave up on Microsoft's online business and priced that failure into Microsoft's market cap long ago. At this point, investors are probably just relieved that Microsoft has finally admitted the obvious, which might mean that it's ready to try something different.
From Brian Maloney, owner of a trucking company that Mitt Romney visited yesterday, explaining how he built his business:
The government didn’t help — at all. No tax breaks. No “Good guy, Brian.” Just hard work did that and a few other dedicated people that came along with me.
I probably don't need to finish this story, do I? In the same way that Joe the Plumber wasn't named Joe and wasn't really a plumber, it turns out that Maloney once took advantage of an industrial revenue bond to move his business to Roxbury, and much of his early success was due to a contract to overhaul city buses.
None of this is a big deal. I imagine Maloney worked his ass off to build his company. Mainly it's just a warning to Romney: when he flits around the country embracing folks who have never relied on the government for a single dime, his team better do a good job of vetting them. Because most likely, all he's going to do is provide the librul media with a lovely, prepackaged set of stories that demonstrate how virtually every small business in America benefits from government programs in one way or another. And that includes one particular small business called Bain Capital. I'll bet someone is working on that story already.
There's a (potentially) very good essay to be written called "Why People Hate Liberals." Short answer: we're annoying! We're always telling you that you're destroying the planet, contributing to oppression, killing people halfway around the globe, or just not caring enough about poor people. And you don't want to hear it. You just want to turn on American Idol and relax after a tough day at work.
This essay can't be written by a conservative. (And it really really really can't be written by David Brooks.) It needs to be written by an honest-to-goodness liberal who spends a few months talking to actual people — and then tries to figure out why they hate liberals even though they don't really hate liberal ideas all that much. Somebody get on this, OK?
Apparently the shitstorm that engulfed Barclays Bank after it paid a big fine for rigging LIBOR rates has put the fear of God into everyone else on Wall Street. So now they're hoping to avoid the spotlight by teaming up to pay a gigantic joint settlement and hoping that no one pays too much attention to the individual banks who are walking the plank:
The sources told Reuters that none of the banks involved now want to be second in line for fear that they will get similarly hostile treatment from politicians and the public. Bank discussions about a group settlement initially took place before the Barclays agreement, and picked back up in the aftermath.
It is unclear which banks are involved in the potential settlement talks. More than a dozen banks are being investigated in the scandal, including Citigroup, HSBC, Deutsche Bank and JPMorgan Chase. They all declined to comment.
....While Barclays received a 30 percent "discount" on the fines for cooperating fully with authorities, it sustained far more serious damage with the subsequent loss of its top management and a public pillorying at the hands of politicians.
The specter of severe penalties from regulators and the possibility of multi-billion dollar class action suits has hung over more than a dozen banks being investigated worldwide since the extent of attempts to rig Libor became clear in CFTC and FSA documents released with the Barclays settlement.
I suppose this is smart. They all know they're guilty, and they all know they're going to pay up eventually. And the document dumps are likely to be hugely damaging. So why not just avoid all that, fess up (sort of), and avoid the public disclosure of damning emails? It's only money, after all, and they can make that up by furtively raising overdraft fees on all their debit card holders. Sounds like a no-brainer to me.
"I would tell them: 'He is brilliant. Sometimes, like the emperor, he is brutal.'"
—William Weidner, former president of the Las Vegas Sands casino, recalling his struggle to properly explain casino magnate and super-PAC megadonor Sheldon Adelson to Chinese officials. Adelson's business activities in Macau are the subject of a federal investigation for potentially violating the Foreign Corrupt Practices Act.
Attack Ad of the Week
This anti-Romney ad from Priorities USA Action, the pro-Obama super-PAC, came out last month. This week, In These Times labor reporter Mike Elk tracked down the star of the spot, Donnie Box, who had some surprising things to say about President Obama. Box appeared in the ad because he used to work as a steelworker at GS Technologies in Kansas City, which was shuttered by Bain Capital in 2001, and Box told Elk that Mitt Romney is "an asshole" who played a major role. But Box revealed to In These Times that he's no Obama fan either—"I think Obama is a jerk, a pantywaist, a lightweight, a blowhard. He hasn't done a goddamn thing that he said he would do"—and plans to sit the election out.
Stat of the Week
$6 million: The June fundraising haul of pro-Obama super-PAC Priorities USA Action, including $2 million from former Qualcomm director Irwin Jacobs and his wife, Joan, and $1 million from actor Morgan Freeman. While conservative outside-spending groups continue to enjoy a big money advantage over their liberal counterparts, a Politico Influence analysis found that liberal super-PACs actually spent more money than conservative ones on election ads in the first half of July.
Disclosure Evasion of the Week
Earlier this year, a federal district court ruled "that Congress did not delegate authority to the FEC to narrow the disclosure requirement" that has kept anonymous the funders of "social welfare" nonprofits' issues ads, which mention candidates without telling viewers how they should vote. In response, US Chamber of Commerce president Tom Donahue decried the ruling as "all about intimidation." The decision will likely be challenged, but the Chamber is now sidestepping the court anyway by spending more than $1.1 million on "express advocacy" ads, which do encourage viewers to vote for specific candidates, supporting Republicans in Hawaii, Nevada, New Mexico, and North Dakota. Here's a boxing-themed spot that attacks Democratic Rep. Shelley Berkley, who is challenging incumbent Sen. Dean Heller in Nevada:
• Matt Bai argues that reporters have exaggerated the impact the Citizens United ruling has had on the 2012 election. New York Times Magazine
• Election law expert Rick Hasen, who is criticized in Bai's article, disagrees. Election Law Blog
• A new iPhone app developed by students at MIT will tell you if ads playing on your TV are funded by super-PACs. Forbes
• Has anti-Citizens United sentiment dissuaded Democrats from giving to super-PACs? Politico
• The descendants of America's first Mormons are giving big to pro-Romney super-PAC Restore Our Future. New York Times
Call it a magic word gaffe—a statement that reveals not what a politician believes, but what you already feared, in your bone marrow, that a politician believes. Democrats still can’t understand why Obama’s speech is supposed to offend anyone. Republicans know that he’s a closet socialist, and that this sentiment only comes out when his energy is flagging.
Yep. The proposition that Barack Obama was actually saying — literally — that business owners don't build their own businesses doesn't make a lick of sense. Unless, that is, you're already convinced that he believes this, and only now has he finally tripped up and admitted it. In that case, it makes all the sense in the world. And what does this contempt for business owners translate into, policy-wise? An increase in the top marginal tax rate from 35% to 39.6%. Apparently this is the rallying cry of today's socialist revolutionaries:
What do you want?
Higher marginal tax rates on income over $250,000!
When do you want it?
At the beginning of 2013, or possibly phased in over time if that's not feasible!
This whole affair is so mind-numbingly stupid that I can only barely stand to keep reading my RSS feed while it's still going on. But I'm a professional, and the show must go on. I hope you all appreciate what I'm doing for you.
This is from the latest YouGov poll, and it shows Mitt Romney's big problem in a nutshell: people just don't like him much. He's doing OK among Republicans, and he'll probably do better as the election draws closer, but among independents he's 24 percentage points behind Obama in likeability. You may or may not believe that Americans should vote for the guy they'd rather watch the Super Bowl with, but they do. And right now, they really, really don't want to invite Romney into their living rooms.
Before Mitt Romney was dodging questions about his tax returns and his role at Bain Capital, he was was trying to squirm out of stating a coherent immigration policy. In a new Spanish-language ad, Romney carefully avoids taking an actual position on immigration policy, substituting gauzy platitudes about bipartisan solutions and America being a "nation of immigrants" instead of saying what he'd actually do. That's probably because most Latino voters wouldn't like it if Romney said what he'd actually do.
The ad, which is narrated by Romney's son Craig, also touts the fact that Mitt Romney's father was born in Mexico:
The spot isn't only vague—it's also misleading. As Huffington Post's Elise Foley notes, Craig Romney says, "As president, my father will work on a permanent solution to the immigration system, working with leaders of both parties." Typically that has meant comprehensive immigration reform, which Romney has opposed or supported over the years based on which part of the Republican base he's trying to appeal to.
During the GOP primary, Romney campaigned as an immigration restrictionist, hammering his colleagues for supporting "amnesty" and talking up "self deportation." He promised to veto the DREAM Act, though he won't say where he stands on Obama's decision not to deport the undocumented immigrants who might benefit from it. Now he's attempting to soften his record on immigration—not by shifting from his hardline positions, but by moderating his rhetoric. It's easy to understand why—the latest Latino Decisions poll shows President Barack Obama with 70 percent of the Latino vote to Romney's twenty-two percent. Romney doesn't have to win the Latino vote to make it to the White House, but those kind of numbers certainly hurt his chances.
One key but little-appreciated fact is that, according to persuasive research by Jonathan Caulkins, Angela Hawken, Beau Kilmer, and Mark Kleiman in their new book Marijuana Legalization: What Everyone Needs To Know, is that legal pot would be amazingly cheap. In fact, midgrade stuff would be so cheap that it might make sense for businesses to give it away like ketchup packets or bar nuts.
....This would make pot far and away the cheapest intoxicant on the market, absolutely blowing beer and liquor out of the water. Joints would be about as cheap as things that are often treated as free. Splenda packets, for example, cost 2 or 3 cents each when purchased in bulk.
Probably nobody cares about this, but there's a reason marijuana isn't legal anywhere in the world: the Single Convention on Narcotic Drugs, an international treaty adopted in 1961. Marijuana is a Schedule I drug under this treaty, which means it's flatly, totally forbidden. Countries can decriminalize marijuana use, but no signatory to the treaty can legalize either use or cultivation.
So it's not just a matter of getting either Congress or a state legislature on board for legalization. You'd have to get the United States to withdraw from the 1961 treaty, and that just isn't in the cards. Decriminalization and wink-wink-nudge-nudge lack of enforcement are about the best we can hope for anytime in the near future.