Thursday, October 24, 2002

More fun with Republican accounting: Doug Forrester, their Senate candidate in New Jersey, won the primary by scaring off other candidates with the war chest he supposedly had earned from his privately held company, which he valued at $100 million, even though it has a profit margin of under ten percent on revenues estimated at $13 million. (The usual rule of thumb is to value a company at roughly ten times earnings; even if the revenue estimate is low, that would yield a value well under $20 million, and perhaps under ten).

How was that justified?

"P.B.M.'s are a high-growth industry," Mr. Forrester said. "Look at the course of the valuation of Amazon dot-com stock. Their worth was remarkable, but their earnings were negative."

This logic comes from the same party which insists that the Bush tax cuts don't have anything to do with the burgeoning budget deficit, which is entirely the fault of Osama bin Laden. But in this case, they're apparently getting what they voted for --- imaginary money won't pay for real ads, and Republican party faithful, having heard all about Forrester's fools' gold, are somehow reluctant to supply the more tangible variety.


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