Category: Scott Gurvey's Public Offering

I bought my first house in 2002. Or, rather, I entered into agreement to share ownership of a house with a bank for the next 30 years. Some of my friends and relatives bought a home when they got their first job. They were smart. I was not. But it’s not because real estate has been such a fantastic money maker. On average it has done very well, but so have other investments including the stock market.

No, the reason why it was smart to buy rather than rent is because the government wanted you to buy and gave you an incentive. It made both mortgage interest and real estate taxes generally deductible from the individual federal income tax. That tax incentive is worth a great deal over the course of a lifetime. Homeowners win. Renters lose out.

Why? If you ask a politician, it has something to do with the American Dream. It appears home ownership is, or was, the ultimate mark of having arrived, of having made a success for yourself. I don’t quite see it. But it is generally considered political suicide to suggest the mortgage or property tax deduction be eliminated.

And so it ends. Not with the big blast of headlines and news conferences with which it began; but with the whimper of two court rulings dismissing the charges. Last week New York’s highest court threw out four of six claims the state made against former New York Stock Exchange CEO Richard Grasso. Now an intermediate appeals court has thrown out the remaining two and the word from the office of Andrew Cuomo, New York’s current Attorney General, is that the state will not appeal.

Former New York Attorney General Eliot Spitzer had charged Grasso with making an unreasonably high salary. Spitzer acted under the state law governing the operation of non-profit corporations, which the NYSE was at the time Grasso was at the helm. Spitzer also charged Home Depot co-founder Frank Langone, who was chairman of the NYSE’s compensation committee, with misleading the NYSE’s board of directors on the details of Grasso’s pay.

The claim against Langone was also thrown out, the court ruling that since the NYSE is now a for-profit corporation, the state can no longer pursue claims based on the law for non-profits.

A recent news item in Variety caught my eye. It said, "Out-of-context theater reviews in advertisements that make a theatrical turkey sound like the second coming of Hamlet are now subject to criminal prosecution in Britain.” Theater owners found guilty of misleading theatergoers can be fined as much as $9,000.

You know what the Brits are after; the ad for a play that attributes the words, “Terrific… Smashing…” to the critic who really wrote, “I left the theater with a terrific headache and felt like smashing the playwright’s face for wasting my time.”

It turns out that this new law is not a British idea. It was enacted in response to a European Union regulation. It is hard to imagine such a law being enacted in the United States, but it is just the kind of thing the EU seems to spend a lot of time and money worrying about. We do have restrictions on demonstrably deceptive marketing in the US. But we don’t try to police the hyperbole which is expected in advertising.

Just about everyone except Hillary Clinton has agreed that Barack Obama will be the nominee of the Democratic Party for President. And so with presumptive nominee Obama joining the presumptive Republican nominee, John McCain, let the games begin.

The Wall Street Journal quickly weighed in with a poll reporting that McCain comes out ahead by a wide margin when people are asked, “Which candidate do you believe will be best for business?” There is a problem with that question being so broad as to have little meaning. Still, Republicans certainly have an edge in terms of voter perceptions on pro-business issues.

Let me make something clear. Microsoft CEO Steven Ballmer has not asked for my advice regarding Yahoo! Or anything else for that matter. But why should that stop me?

Microsoft's bid for Yahoo! was both bold and risky. It was also expensive at nearly $50 billion, although Microsoft can afford it. The bold came from the fact that it was an unfriendly act, something new for Microsoft at least at that scale. The risk came from the challenge of integrating the Yahoo! staff into a company with a very different culture and world view.

But Ballmer thought it was a reasonable risk. More than Yahoo!’s employees, he wanted Yahoo!’s eyeballs, the people who used the site often enough to make it number two in Internet search. It is the selling of ads directed to those eyeballs that has been immensely profitable for Google. Ballmer thought he could win over some of the key staff and could afford to lose the others. He did not expect to find in Yahoo! CEO Jerry Yang a man who would enter into agreements diminishing the value of the company, just to keep it out of Microsoft’s grasp.

It’s done. Finished. Complete. Mailed. Yes, mailed. I don’t seem to be able to e-file my tax return, and that’s just one of my gripes. Mind you, I am not a tax protester. Of course, less is always preferable, but in truth my federal income taxes don’t seem to be too bad. Don’t get me started on my property tax.

No, my gripe about taxes is less about the amount and more, in fact, mostly, about the unbelievable complexity. For a few years back in the 80s I had an accountant. But when the accountant’s fee went into 4 digits, I decided to fight back. The government, in my view, may have a right to make me pay a fair share to support government. But it does not have a right to make it so darn difficult to file that I have to spend big bucks for professional help.

So each year I spend under $100 to buy Intuit’s TurboTax program. That includes the fees for two states since I live in New Jersey but work in New York. Then I clean off my desk, pile on the receipts and records (carefully maintained with Microsoft Money throughout the year) and do the best I can with a hopeless task.

Robert F. Goheen was a professor of classics when he was selected, at the age of 37, to become the 16th president of Princeton University. When he began his term in 1957, Princeton was a good school. But it was also very much a southern men’s club. When he stepped down in 1972, Princeton was one of the world’s great universities, having grown greatly in size and budget; in research productivity; and in ethnic and racial diversity. And it had become coeducational.

That last change was probably the most traumatic. Princeton’s trustees voted in favor of coeducation in the spring of 1969. The first women to be admitted as freshmen in an incoming class arrived that fall, members of the class of 1973. I was a member of that class, and I remember the turmoil on campus, with television crews running all over asking everyone what they thought of the matter. Since I had attended a coed elementary school and a coed high school which had far more diversity than was found at Princeton in 1969, I didn’t see much novelty. In fact, with only one hundred women and about one thousand men in the class, I found the ratio disappointing!

The Bear Stearns meltdown story has been such a rapidly moving target that much of what gets written about it has a shelf life of hours at best. Wall Street insiders had barely finished their high-fives at the self-immolation of their nemesis, New York Governor Elliot Spitzer, when rumors began to circulate that a major investment firm was facing a capital crisis. Bear was quickly identified, and the crisis turned into a good old fashioned run on the bank.

J. P. Morgan Chase stepped up in a move reminiscent of that of John Pierpont Morgan, who led a group of fellow bankers to quell the panic of 1907. In the 2008 remake, J. P. Morgan Chase, backed by a guarantee from the Federal Reserve, loaned Bear the money it needed to honor its commitments.

The Yahoo! directors have now turned down Microsoft’s $44.6 billion dollar offer for their company, saying it undervalues the company. It takes guts to do that when the bid represents a more than 60% premium over the price of Yahoo! stock before the offer was made. The betting is that Microsoft will sweeten the deal a bit and Yahoo! will come around. It’s hard to see how any other bid will be a match or any other business relationship will be as profitable and still get approval from regulators.

But the bettors may be guilty of a typical Wall Street crime, looking only at the numbers and ignoring the personalities involved. Yahoo! co-founder and CEO Jerry Yang doesn’t like Microsoft. It is hard to imagine him working for Microsoft. And you can say the same for many Yahoo! employees, who have been steeped in Yahoo!’s anti-Microsoft culture. Those employees represent one of Yahoo!’s major assets, and figuring out how to retain them and keep them innovated in the Microsoft culture would be one of the biggest challenges in any acquisition.

So…the boss says, “How about taking a look at television?” I figured, “Why not?” I watch television. This is a good excuse to watch some more.

Of course, he had something more complicated than that in mind. Thus began a multi-month project, the fruit of which you will see beginning tonight, as I begin a four part series of reports titled, “The Future of Television.” Our goal at Nightly Business Report is to give you the information you need for wise investing and money management. So our series will be devoted to indentifying the trends and the players, information you may be able to use to your advantage.

We’ll begin tonight with a look at the technology. When I was a kid, growing up in Chicago, we had five TV stations. One each affiliated with CBS, NBC, ABC and PBS and a fifth “independent”. TV watching meant the family gathering around the big black and white set in the living room, watching what the stations were offering when the stations wanted to offer it.