This NYT piece by Floyd Norris has been given the headline Looking Glass on Earnings Just Got Darker, but I think this is wrong, assuming “dark” is used correctly to mean obscure (it’s a slightly mangled quote from the Bible), and not to mean “dismal”.
The S&P definition of “core earnings” reported in the article is pretty much right. It
(i) expenses stock options
(ii) calculates pension costs correctly
(iii) does not allow the exclusion of ‘one-time’ charges for restructuring
(iv) allows the exclusion of charges for impairment of goodwill in acquisitions (this is correct in the case of stock-only mergers, it’s not clear whether it also applies when cash is paid).
The upshot is that core earnings give a much clearer picture of profitability than pro-forma earnings, operating earnings or Generally Accepted Accounting Practice (GAAP).
The bottom line – profits are less than half those reported by companies and the S&P 500 is currently trading at around 50 times earnings.

Doonesbury is running daily strips on blogging at the moment, but the Sunday strips are on a different cycle. Ken Parish should love this one.

Ken Parish presents a solid demolition of gun lobby lies, particularly those of John Lott in yesterday’s Oz. The claim that widespread ownership of deadly weapons is going to save lives is so silly that no-one without a strong prior prejudice could believe it, even without the glaring evidence of the US. The most common prejudice is that of ‘ordinary law-abiding gun owners’ who have no intention of killing anybody, and don’t see why they shouldn’t have a gun. Almost certainly, the Monash killer fell into this category until fairly recently.

Another possible prejudice is political/ideological. Jason Soon took the trouble to argue that gun control wasn’t inconsistent with his libertarian views, but most of those arguing against gun control (including John Lott) are ideological libertarians. Rather than fighting over the statistics, which are pretty clear-cut, I’d be interested to see some of these critics present a principled statement of a libertarian position (there’s obviously more than one) on gun ownership. In particular, does it extend to private armies, and to military weapons, that is, heavy weapons and not just firearms? This would seem to provide a defence against the state so feared by libertarians, whereas handguns just give citizens the means of killing each other.

Update: The two students killed in the Monash attack were Steven Chan and Xu Hui (William) Wu. We should think of their families along with all the others mourning loved ones in these dreadful times.

A blogging welcome to Gary Sauer-Thompson who has a fascinating blog, but hasn’t yet learned how to hyperlink. The best way of learning all these things is to find a page with good stuff on it, save it as HTML and then copy what you want. But for those who don’t want to go to this trouble, Blogger.com has a “Blog this” button you can download. And of course you can always buy a book on HTML, and follow the advice of the classic acronym RTFM (read the … manual).

Early news reports suggested that the Monash killer was disarmed by an econometrics lecturer, Lee Gordon-Brown, who tackled him, with the assistance of students. But this report says the helpers were another lecturer, Brett Inder (a distant acquaintance of mine) and a student who turns out also to be a part-time lecturer and martial arts champion. I certainly hope I never have to deal with anything like this, but these guys are setting a pretty high standard for the rest of us, whether or not they want to be called heroes.

At this stage, it’s not clear whether the push for better gun laws will fizzle out into meaningless tightening of rules that will be evaded as soon as our attention is diverted, or whether we’ll get a buyback sufficiently broad to remove most handguns from the community. I suspect that the politicians who are ducking for cover have misjudged the politics of this question (I’m sure they all know that the right policy is a near-total ban). At least in country Australia, rifles and shotguns were standard tools until quite recently, and restrictions on their ownership and use raised real concerns about the erosion of traditional ways of life. Handguns are the province of urban criminals, psychos, collectors (whose motives must be considered dubious) and a relatively small number of genuine sportspeople whose needs could be accommodated through an armoury system. A handgun ban will be much easier politically than the ban on semi-automatic rifles and shotguns.

Update Alex Robson weighs into the gun debate, showing in the process that you can prove anything with statistics, or at least give it the old college try. He quotes Joyce Malcolm saying:

In 1981 the American rate [of homicide] was 8.7 times the English rate, in 1995 it was 5.7 times the English rate, and the latest study puts it at 3.5 times ..(one sentence snipped)… Yet Americans still enjoy a substantially lower rate of violent crime than England, without the “restraint on personal liberty” English governments have seen as necessary.

If Americans “enjoy” 3.5 times the murder risk, I’ll stick with Australian misery. And while I’m not sure precisely what is meant by “restraint on personal liberty” , the reduction in American murder rates in the 1990s has been achieved, in part, by imposing the highest rates of imprisonment in the developed world (I think anywhere in the world, but I’ll check this).

• Unemployment on the rise. Australian Financial Review 12 September
  Summary: The real rate of unemployment is between 10 and 20 per cent
  Grab: Taking all the evidence into account it seems reasonable to conclude that unemployment in Australia is worse than at any time since World War II, except for the trough of ‘the recession we had to have’. This dismal outcome has been recorded at a time when our economic performance is routinely touted as ‘miraculous’ and ‘worldbeating’
• Breaking the camel’s back. Australian Financial Review 26 September
  Summary: In the name of consumers, economic rationalists and managerialists have made life miserable for producers
  Grab: The fable of the straw that broke the camel’s back is, among other things, a warning about overburdening those who actually do the work. Economic reformers and enterprising managers have been adding straws to the bundle for at least a decade. It’s time to reduce the burden.
• A case for equity partners. Australian Financial Review 10 October
  Summary: Responds to critics of a proposal to allow financial institutions to take an equity stake in owner-occupied housing. Surveys the housing bubble.
  Grab: There are plenty of unresolved questions about equity partnerships, but the proposal does not, as many have suggested, deserve instant dismissal. Along with a number of Australian and international economists, representing a broad spectrum of opinion on economic policy issues, I was a signatory of a statement arguing that further investigation of this proposal was desirable. Nothing I have seen in the ensuing debate has led me to change my mind.

Given the centrality of warblogging* in the growth of the blogging phenomenon, particularly in the US, I am fascinated by the question of how the blog world would adapt to a resolution of the Iraqi crisis based on weapons inspections rather than war. So far, all I’ve found in warblogging circles is denial. I think it’s clear though, that such a resolution would be the end of warblogging in the classic sense. Of course, there’s still the real war on terror, that is, the struggle against al Qaeda and its offshoots, but this won’t serve as a basis for warblogging for two reasons:
(a) news is too infrequent and sketchy; and, more importantly
(b) everyone’s in favour of it.
Of course, there are disagreements about tactics, and more serious issues about civil liberties, but warbloggers are as divided as everyone else on these questions.
The big question then is, what, if anything, will replace warblogging at the centre of the blogosphere? My best guess is that we will see a breakup into a large number of intersecting spheres with no obvious centre. This has already happened here to a limited extent as “Ozplogistan” has become a distinct virtual reality rather than a possible label for the Australian minority of the US-centred blogworld.

*Warblogger, like ‘economic rationalist’, is the kind of term most people rightly dislike, but find to be inescapable in talking about a large and more or less likeminded group. And, in both cases, the group concerned used it first.

I just gave Tim Dunlop an award for coining the term “Steynwalling” and now I’m hoist by my own petard, as Don Arthur presents a great post on “Quiggling the factoids on poverty”. The only consolation is that Don likes my explanation of the Instapundit factoids on this topic, so I guess “Quiggling” is one of those rare eponymous verbs that reflects favourably on the original source.
PS No one has yet pointed out my use of the proverbial phrase “hoist by my own petard”, which is, originally, due to Shakespeare (though I had to look this fact up), so I’ll do it. If anyone still has the patience, I’m happy to explain why this is legitimate, and would be in a newspaper article, whereas stealing lines from Oscar Wilde usually is not.

I’ve just seen the news that the Monash killer had licenses for all four of the guns he used. If the danger of terrorist attack had not already settled the issue of gun prohibition in Australia, this ought to do it. No one in an Australian city (or country town, for that matter) ought to be allowed to own a gun. Security guards and police should be able to take guns from an armoury for work and return them at the end of the shift, and I suppose some similar arrangement could be made for the ‘sport’ of pistol shooting. Farmers (and professional shooters) need rifles and obviously have to keep them on-farm. But possession of a firearm (or gun parts, or bullets) outside these limited exemptions ought to be treated as evidence of intention to murder, in the same way as possession of a ‘traffickable quantity’ of drugs is sufficient to convict someone of being a drug dealer, and similarly with housebreaking implements for burglary. There is, after all, no real use for a gun but killing, and no real use for a handgun but killing people.

Whether or not this would reduce the use of guns by professional criminals, I don’t know. But the Monash killer was, until yesterday, a perfect example of the ‘ordinary law-abiding gun-owner’ represented by bodies like the Sporting Shooters Association of Australia. He would probably not have been able to obtain one firearm illegally, let alone four. When the SSAA has worked out a foolproof plan to keep potential murderers out of their ranks, I’d be happy to give their guns back.

I think Tim Dunlop already noted the new White House line from Ari Fleischer that Iraqi disarmament is equivalent to regime change. But now the NYT has it from Bush himself. So far, things have gone as I predicted after Bush’s first UN speech, and I’m feeling happier about the Iraq situation than I have done at any time since the “Axis of Evil” speech. The worst-case outcome, a unilateral US war with no clear aims, now seems much less likely. If Saddam disarms, Bush will have scored a major victory without compromising the war on terror. If he refuses, it should be possible to get unified world support for his overthrow. The dangerous case is where Saddam engages in foot-dragging just enough to justify an attack as far as the US is concerned, but not enough for others. This is his past form, but he may well realise that it’s his own neck on the line this time.
A peaceful resolution in Iraq will be a huge benefit to us in hunting down the Bali bombers. We need the full co-operation of the Indonesian government and civil society and this will be much easier to get if we are not engaged in what can be represented (in the terms of praise used by leading warbloggers) as ‘a new imperialism’ or ‘cultural genocide’.

Of course, from the viewpoint of unilateralist warbloggers, the reverse of the above analysis applies. If Saddam complies totally, they don’t get a war at all, and if he is totally defiant they get the ‘wrong’ war, one with UN authority and a multinational coalition that will run the postwar nationbuilding, if not the actual fighting. The optimal outcome from this viewpoint is the one where Saddam promises to comply, then drags his feet.