23 January 2010
Boyd story and the fall-out
I'm rather late to the buzz about this piece, so I'll only make the observation that Boyd buried his lede. The story isn't really about Byrne's "nasty" streak, as the headline suggests. Nor does it use Overstock in any very helpful way as a microcosm of how and why the financial press fell down on the job of reporting the roots of our financial troubles before the big blow-up, despite the opening paragraph.
No ... what the story turns out to be about once it settles down is the fall-out from the Gradient/Rocker lawsuit. That lawsuit has been settled, and arguments over that settlement have occupied familiar positions.
Overstock: We were right, which is why they gave us money. We are vindicated!
Skeptics: They gave you money because you are a nuisance, trials are expensive, and they just wanted you to go away.
But Boyd's story tells us that the reason Overstock had for settling the lawsuit exceeded the money received. It may have settled because it was concerned about certain materials that would have come out had there been a trial. Did Boyd meet Mark Felt in a garage to get this stuff? I don't know. But ... Boyd does seem to be familiar with evidence that may well have accumulated during discovery proceedings.
One of the defendants in the lawsuit, Gradient, had issued a research note in May 2005 offering a detailed criticism of certain diamond/jewelry wheelings and dealings going on at the time. Gradient wondered whether the structuring of the deal was intended to allow the company to report top-line benefits without reporting losses.
But, Boyd now tells us, Gradient was over-analyzing. It wasn't accounting trickery. It was apparently a tax dodge, known within the company by the lovely name, "Operation Heist and Freeze."
Here, by the way, is Byrne's initial response to Boyd's questions. In response to a question about the avoidance of sales taxes, Byrne says he is giving the "same answer" as he had to the earlier questions (that the issue didn't require disclosure because it was immaterial): "plus tax is discussed in the due course of the
conduct of any business plus have you ever considered trying the fact-fact-logical-inference thing instead of the stuck-on-stupid-reporter thing?"
Notice the difference between Byrne's initial response, to which I've just linked you, and his later reconsidered response. With regard to the bit near the end that I just quoted, there is no difference. The difference you may want to notice, though, is at the start. Byrne decided to dial back the oral-sex-obsessed insult with which his initial riposte had begun. Good move, but on the internet, all is forever.
So even though the story doesn't turn out to be about Byrne's "nasty" streak especially, Byrne's responses surely reveal one.
Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.