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It is corporate earnings season again. All of the second quarter earnings results are coming out for our fine country’s publically traded enterprises. Something is different this time around though. Thanks to a new change in US Generally Accepted Accounting Principles, the accounting for stock options has changed. Now, all the company earnings reports I see coming out say something to the effect of… “We had a strong quarter. We earned 86 cents per share before the effect of the new rules related to accounting for stock options.”

As you may or may not be aware, stock options have become a preferred method of paying employees in corporate America as the accounting rules did not require stock options to be counted as expenses on a company’s income statement. This was justified essentially by saying that since no money is paid by the company, it is therefore not a company expense. The argument made by the accounting profession was that it is actually an expense of sorts though as when stock is issued to employees, the ownership share in the company of all other shareholders is diluted (they now own a smaller percentage of the company despite owning the same number of shares). Well the rules finally changed and now companies must treat the issuance of stock compensation as an expense. Executives have been OUTRAGED about it. They say they now cannot use options as extensively to recruit employee talent which will dramatically hurt their business and therefore the economy.

Well, I am a big supporter of not hurting companies through rule-making and definitely not hurting the economy. But I have three questions for the CEOs and corporate boards that are throwing fits about this. First, if stock options are not compensation, then what exactly are they? Second, if compensation is not an expense, then what exactly is it? Third, if expenses shouldn’t be deducted from earnings, then what exactly should we do with them? It is clear as day to me that stock options should be expensed.

So what happens? Companies make their earnings releases this quarter and try to hide the effect of expensing these options by saying “earnings were X prior to the effect of stock option accounting.” This clearly indicates to me the company is embarassed to say how big an expense the issuance/retirement of stock options is, which indicates to me that before they were expenses on the financial statements, they were HURTING the shareholder value the rest of us realized on the stock.

Conclusion… beware of company’s beating this “before stock compensation expenses” drum, they were probably screwing you as a shareholder before. The playing field is now level and managment is more accountable for their own compensation. Win… common investor, lose… greedy executives. Go accountants!

President Bush has accomplished many “firsts” during his time in the oval office, although as I am sure you all know now, he had never used the presidential power of veto. Well he did, and in doing so blocked (unless congress can rally enough support to override) multiplying federal funds available for doing stem cell research. I have to say this for the president, it would be extremely difficult to have to be the center attention in making the ethical decision of whether or not 5 day old embryos are in fact human life.

I however am really upset about the veto. The president once again standing in stem cell research causes me three problems.

1. Stem cell research is (according to everything I’ve read in terms of actual medical publications) the most promising field of medical discovery that exists today. While theories of utilitarianism fail over and over, I do think it is hard to discount the fact the destruction of relatively small number of embryos could lead to saving literally millions of people.

2. It is yet another instance of Mr. Bush and the religious right attempting to legislate morals for the rest of us. We are supposed to live in a free society to the extent that it doesn’t infringe on the rights of others. If you are against stem cell research, fine. Do not participate in the research, do not donate your own embryos, and do not accept artificially grown tissue for a transplant when your child has a liver failure. But please don’t force YOUR religious views on the rest of us in country where we are guaranteed freedom of religious (and ethical) choice. Stem cell research in no way affects the safety, freedodm, or liberty of anyone who finds it immoral that I can see, so long as they are not forced to participate.

3. The EU just decided in favor of funding the research. This will prove to be another advantage foreign countries have to gain ground on the US in the advancement of medicine, technology, and their very economy. People are already going abroad for medicine and medical procedures in droves as a result of over-legislation at home. Now we will be going to Germany for organ transplants. It is also worth noting that some of the most heavily catholic countries in the world (Italy, Spain, etc.) approved the EU resolution.

It is sad day I feel, hopefully private business will fund the research. If my child was in need in heart I would not have to hardly think twice in deciding to give them mine. Maybe this research could lead to advances that will save my life one day should either my child’s heart or my own go bad one day. A few single cell organisms created in a laboratory really won’t mind that much will they?

So I am smack in the middle of my last set of midterms, only 3 weeks away from going home! That is good news but not what I was referring to. I got the details of the graduation schedule to all those coming. The good news I guess is that I apparently made the list for graduating with honors. So once again, I probably have to wear something funny looking at graduation that denotes Magna Cum Laude honors.

I feel totally stupid about talking about this but I figured some would want to know. See you soon…

I think I emailed some of you this before, but here they are again… the greatest ten songs of all-time (in my humble opinion).

Top Ten:

1. Last Dance with Mary Jane - Tom Petty and the Heartbreakers
2. Wildest Dreams - The Moody Blues
3. Southern Man - Neil Young
4. Hotel California - The Eagles
5. Light my Fire - The Doors
6. No Leaf Clover - Metallica
7. Piano Man - Billy Joel
8. Stairway to Heaven - Led Zepplin
9. November Rain - Guns n’ Roses
10. I Wanna Hold Your Hand - The Beatles

And the honorable mentions include:

The Voice - The Moody Blues
I Know You’re Out There - The Moody Blues
Neil Diamond - Forever in Blue Jeans
California Girls - Beach Boys
Hells Bells - AC/DC
Freshman - The Verve Pipe
Cryin - Aerosmith
One Headlight - The Wallflowers
Inside Out - Eve 6
Time of Your Life - Green Day
Unforgiven - Metallica
Smooth - Santana featuring Rob Thomas
Walls - Tom Petty and the Heartbreakers
Desperately Wanting - Better than Ezra
Nuthin but a G Thang - Dr. Dre featuring Snoop Dogg
Nookie - Limp Bizkit
Billie Jean - Michael Jackson
Losing my Religion - REM
Pink Floyd - Another Brick in the Wall
Neil Young - Rockin in the Free World
Like a Virgin - Madonna
Freebird - Lynard Skynard
Livin on a Prayer - Bon Jovi
River of Dreams - Billy Joel
Space Oddity - David Bowie
American Pie - Don McClean
Soul Meets Body - Death Cab for Cutie
Vertigo - U2

I know I forgot a whole bunch of honorable mentions but what can you do right. I’ll and them comments as they occur to me

This is perhaps the most interesting thing I have read in a long time… I’m not sure I couldn’t very easily associate my political beliefs much easier to Libertarianism than either of the existing major parties. It’s long, but I highly recommend reading it if you are, as I am, somewhat worn out with governement invading in your life and business.

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